Answer :
Answer:
$40
Explanation:
Final sales value of total production:
Product X = Pounds of raw material × Selling price
= $1500 × 2
= $3,000
Product Y = Pounds of raw material × Selling price
= $2,500 × 4
= $10,000
Product Z = $0
Total = $13,000
Net Realizable Value at split-off point:
= Final sales value of product X + Final sales value of product Y
= $3,000 + $ 10,000
= $ 13,000
Weighting :
Product X = Final sales value of product X ÷ Net Realizable Value at split-off point
= 3000 ÷ 13000
= 0.23
Product Y = Final sales value of product X ÷ Net Realizable Value at split-off point
= 10,000 ÷ 13000
= 0.77
Product Z = 0
Joint cost allocated:
Product X = Weight of product X × Total cost
= 0.23 × $ 5200
= $ 1,196
Product Y = Weight of product Y × Total cost
= 0.77 × $ 5200
= $ 4,004
Allocated cost per pound :
Product X = Joint cost allocated ÷ Pounds of raw material
= 1,196 ÷ 1,500
= $ 0.8/pound
Product Y = Joint cost allocated ÷ Pounds of raw material
= 4,004 ÷ 2,500
= $ 1.6/pound
Therefore, the value of ending inventory is as follows:
= Allocated cost per pound of product X × ending inventory of X
= $ 0.8/pound × 50
= $40