(Sell or process further) In a joint process, Sylvia’s Styles 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 |
$174,000 |
? |
? |
$360,000 |
|
Sales values at split off point |
? |
? |
$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 jackets and blouses?
b. What are the sales values at the split off point for dresses and jackets?
c. Should any of the products be processed beyond the split off point? Show computations.
d. If 4,000 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale?