Alpha Company manufactures products XX1 and XX2 from a joint

Alpha Company manufactures products XX-1 and XX-2 from a joint process. Total joint costs are $510,000. The sales value at split-off was $550,000 for 6,000 units of product XX-1 and $130,000 for 3,000 units of product XX-2. Required: Assuming that total joint costs are allocated using the net realizable value at split-off approach, what amount of the joint costs was allocated to product XX-1? (Do not round intermediate calculations)

Solution

Calculation of Allocated Joint cost to product XX-1:

Product

Sale Value at split off Point

Weight

XX-1

$       550,000

0.80882

(550000/680000)

XX-2

$       130,000

0.19118

(130000/680000)

Total

$       680,000

Total Joint Cost

$       510,000

Allocated Joint cost to product XX-1 = (510000*0.80882) =

$       412,500

Calculation of Allocated Joint cost to product XX-1:
Product	Sale Value at split off Point	Weight
XX-1	$       550,000	0.80882
		(550000/680000)
XX-2	$       130,000	0.19118
		(130000/680000)
Total	$       680,000
Total Joint Cost	$       510,000
Allocated Joint cost to product XX-1 = (510000*0.80882) =	$       412,500