Question

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 240,000 pints of Smooth Skin and 110,000 pints of Silken Skin. Smooth Skin sells for $3.10 per pint, while Silken Skin sells for $5.10 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

Answer 1

Answer:

The answer is "205,241"

Explanation:

Its relative value operation:

                                                         Smooth skin        Seedling Skin           Total

A Unit sold                                            $240000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 110000$

selling price per unit                           $\ \ 3.10 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 5.10$            

Sales value                                 $\ \ 744,000 \ \ \ \ \ \ \ \ \ \ \ \ \ 561,000 \ \ \ \ \ \ \ \ \ \ \ \ \ 1,305,000$

Join its cost allocate$(360000 \times \frac{sales\ value}{1305000})$ $205,241 \ \ \ \ \ \ 154,759 \ \ \ \ \ \ 360,000$

Smooth Skin is assigned the combined costs within each development process by way of the relative cost process                                        205,241