Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $80,000 in the

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Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $80,000 in the

production of 20,000 gallons of P and 60,000 gallons of Q. Garage can sell P and Q at split-off for $2.20 per gallon and $2.60 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows: P Q Separable processing costs $15,000 $35,000 Sales price (per gallon) if processed beyond split-off $3 $4 The joint cost allocated to Q under the relative-sales-value method would be:________.
a) $40,000.
b) $62,400.
c) $64,000.
d) $65,600.
e) some other amount.

Business

1 answer:

harina [3.8K] · Answer 1 · 2026-03-07T15:30:19+03:00

Answer:

The correct choice is option B, which is $62,400.

Explanation:

First, we must calculate the sales generated by each joint product once sold after the split-off point:

Sales value for P = 20,000 * $2.20 = $44,000

Sales value for Q = 60,000 * $2.60 = $156,000

Overall total sales value = $200,000

Joint cost totals $80,000

Allocated joint cost to Q is calculated as follows: total joint cost * Q's sales value / total sales value

= $80,000 * 156,000 / 200,000 = $62,400

Of the total joint cost of $80,000 incurred for both products, Q receives an allocation of $62,400.