ExpertMedium2 marksMultiple Choice
ACCA · Question 09 · Cost Accounting Techniques
Section A
GreenAcres Farm produces two joint products, Alpha-Crop and Beta-Crop, from a single harvesting process. The joint costs incurred up to the split-off point total $50,000. At the split-off point, 2,000 kg of Alpha-Crop (sales value $20/kg) and 3,000 kg of Beta-Crop (sales value $10/kg) are produced. If joint costs are apportioned based on sales value at the split-off point, what is the joint cost allocated to Beta-Crop?
Section A
GreenAcres Farm produces two joint products, Alpha-Crop and Beta-Crop, from a single harvesting process. The joint costs incurred up to the split-off point total $50,000. At the split-off point, 2,000 kg of Alpha-Crop (sales value $20/kg) and 3,000 kg of Beta-Crop (sales value $10/kg) are produced. If joint costs are apportioned based on sales value at the split-off point, what is the joint cost allocated to Beta-Crop?
Answer options:
A.
$30,000
B.
$25,000
C.
$21,429
D.
$28,571
How to approach this question
Calculate total sales value for both products. Then find Beta-Crop's proportion of the total sales value and multiply by the joint costs.
Full Answer
C.$21,429✓ Correct
Sales value of Alpha = 2,000 * $20 = $40,000. Sales value of Beta = 3,000 * $10 = $30,000. Total sales value = $70,000. Beta's share of joint costs = ($30,000 / $70,000) * $50,000 = $21,429.
Common mistakes
Apportioning based on physical units (kg) instead of sales value.
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