US CMA Part 1 · Chapter 4 · Question 5 of 22
A joint process costing $240,000 yields 8,000 units of Product P, with a sales value at split-off of $30 per unit, and 12,000 units of Product Q, with a sales value at split-off of $10 per unit. Using the sales value at split-off method, how much joint cost is allocated to Product P?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $160,000
Explanation
Sales value at split-off: P = 8,000 x $30 = $240,000; Q = 12,000 x $10 = $120,000; total $360,000. P's share = $240,000 / $360,000 = 2/3, so P is allocated $240,000 x 2/3 = $160,000. The physical units method would give $96,000.
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