Question

The following questions relate to Kyle Company, which manufactures products KA, KB, and KC from a joint process. Joint product costs were $191,000. Additional Information follow Sales Value at Product Units Produced Sales Values Additional Costs 62.000 20,000 230,000 170,000 200,000 200,000 32,000 After the publication of recent scientific test results, the government has banned the sale of product KCF KC is produced, it must be disposed on an approved way that costs $1.000 for every 25.000 unts produced Required: a. Assuming that Kyle Company continues to use the physical quantities method of allocation what it costs will be allocated to KA and to KB, respectively? (Do not found intermediate cali s ) Product Joint costs KAT KBT Sel at spor b. Which if either product would you recomm None of the above References eBook & Resources ocator L Worksheet 09 Difficulty: 2 Medium

Answer 1

1 a. 2 Joint cost 3 Cost of disposing off KC 4 Total cost to be allocated $191,000 $179,000 $370,000 6 Units produced for KA 7 Units produced for KB 8 Total units produced 86.000 62.000 148.000 Product KA Joint Costs $215,000 $155.000 KB 14 b. 15 Additional income from KA if processed further 16 Additional income from KB if processed further $34.000 $16.000 17 The correct option is 'none of the above'. None of the product should be sell at split-off point bceuase both the products would 18 generate additional income if sold after further processing. Calculations are shown below: 1 a. 2 Joint cost 3 Cost of disposing off KC 4 Total cost to be allocated 191000 179000 =B2+B3 6 Units produced for KA 7 Units produced for KB 8 Total units produced 86000 62000 =B6+B7 Product Joint Costs ΚΑ =(B4/B8)*B6 12 KB =(B4/B8)*B7 13 14 6. 15 Additional income from KA if processed further =(350000-260000)-56000 16 Additional income from KB if processed further 1=(290000-230000)-44000 17 The correct option is 'none of the above'. None of the product should be sell at split-off point bceuase both the products would generate additional 18 income if sold after further processing.