Answered

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Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $360,000 for a standard production run that generates 170,000 pints of Smooth Skin and 300,000 pints of Silken Skin. Smooth Skin sells for $3.20 per pint, while Silken Skin sells for $5.20 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off point, how much of the joint cost of each production run is allocated to Smooth Skin using the relative sales value method

Sagot :

Answer and Explanation:

1. The computation of the joint cost of each production assign to the smooth skin by relative sales values method is shown below:

Smooth skin

= $360,000 × (170,000 × $3.20) ÷ (170,000 × $3.20 + 300,000 × $5.20)

= $360,000 × $544,000 ÷ $2,104,000

= $93,080

And, for silken smooth

= $360,000 × (300,000 × $5.20) ÷ (170,000 × $3.20 + 300,000 × $5.20)

= $360,000 × $1,560,000 ÷ $2,104,000

= $266,920

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