Question

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $360,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:

Answer 1

Product A and Product C should be sold at the split-off point    

Product B should be processed further.

   What is the meaning of joint costs?

A joint cost is an expenditure that benefits more than one product, and for which it is not possible to separate the contribution to each product.

The accountant needs to determine a consistent method for allocating joint costs to products.

How to calculate joint variable cost?

One of the simplest methods to apportion joint cost is the average unit cost method.

Here, the average cost per unit is calculated by simply dividing the total cost of all the joint products incurred before their splitting-off, by the total of the number of units produced all together.

Learn more about joint cost here:

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