Question

Joint Cost Allocation—Physical Units Method Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 35 12-gauge shotguns and 15 20-gauge shotguns and costs a total of $3,700 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs $35 per gun, after which it is sold for $170 per gun. The additional production process of the 20-gauge shotgun costs $22 per gun, after which it is sold for $142 per gun. Determine the amount of joint production costs allocated to each type of shotgun using the physical units method. Joint Product Allocation 12-gauge shotgun $ 20-gauge shotgun Totals $

Answer 1

Answer:

                          Joint cost allocation

                    Physical units         Joint cost allocated

12-gauge            35                            $2,590

                                                     ($3,700*35/50)

20-gauge            15                               $1,110

                                                      ($3,700*15/50)

Total                    50                              $3,700