Question

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.

	DBB-1			DBB-2			DBB-3			Total
Units Sold		16,000			24,000			36,000			76,000
Price (after addt’l processing)	$	65		$	50		$	75
Separable Processing cost	$	110,000		$	44,000		$	66,000		$	220,000
Units Produced		16,000			24,000			36,000			76,000
Total Joint Cost										$	3,600,000
Sales Price at Split-off	$	25		$	35		$	55

The amount of joint costs allocated to product DBB-3 using the sales value at split-off method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

• $447,120.

• $216,870.

• $939,240.

• $2,213,640.

• $757,800.

Answer 1

Solution: $2,213,640
Working:

Sales value of split off point         
DBB-1 (16,000 units *$25)    400,000      
DBB-2 (24,000 units *$35)   840,000      
DBB-2 (36,000 units *$55)   1,980,000      
Total    3,220,000      
         
Weight for DBB-3 (1,980,000 / 3,220,000)   61.49%     
Joint cost for DBB-3 ($36,00,000*61.49%)   2,213,640