Answer:
Ferrier Chemical Company
Allocation of the joint cost, using weight as the allocation base:
For B7 = $140,000 ($600,000*35,000/150,000)
For K6 = $300,000 ($600,000*75,000/150,000)
ForX9 = $160,000 ($600,000*40,000/150,000)
Allocation of the join cost, using market value:
For B7 = $78,750 ($600,000*$210,000/$1,600,000)
For K6 = $281,250 ($600,000*$750,000/$1,600,000)
For X9 = $240,000 ($600,000*$640,000/$1,600,000)
Explanation:
a) Data and Calculations:
Joint cost of a standard batch = $600,000
B7 K6 X9 Total
Pounds generated 35,000 75,000 40,000 150,000
Sales price per pound $6 $10 $16
Market value $210,000 $750,000 $640,000 $1,600,000
Allocation of the joint cost, using weight as the allocation base:
For B7 = $140,000 ($600,000*35,000/150,000)
For K6 = $300,000 ($600,000*75,000/150,000)
ForX9 = $160,000 ($600,000*40,000/150,000)
Allocation of the join cost, using market value:
For B7 = $78,750 ($600,000*$210,000/$1,600,000)
For K6 = $281,250 ($600,000*$750,000/$1,600,000)
For X9 = $240,000 ($600,000*$640,000/$1,600,000)
b) The market value for each product class is a function of the quantity produced multiplied by the sales price per unit.
