In a joint process, Wear Art produces precut fabrics for
three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative
sales value at split off. The company can choose to process each of the products further
rather than sell the fabric at split off. Information related to these products follows.
Dresses Jackets Blouses Total
Number of units produced 10,000 16,000 6,000 32,000
Joint cost allocated ? $138,000 ? $360,000
Sales values at split off point ? $230,000 $ 80,000 $600,000
Additional costs of processing further $ 26,000 $ 20,000 $ 78,000 $124,000
Sales values after all processing $300,000 $268,000 $210,000 $778,000
a. What amount of joint cost should be allocated to dresses and blouses?
b. What is the sales values at the split off point for dresses?
c. Should any of the products be processed beyond the split off point? Show
computations.
d. If 12,000 jackets are processed further and sold at the regular selling price, what is
the gross profit on the sale