Bailey Products produces two joint products (A and B). Prior to the split-off point, the company incurs
Question:
Bailey Products produces two joint products (A and B). Prior to the split-off point, the company incurs costs of $6,000. Product A weighs 30 pounds, and Product B weighs 120 pounds. Product A sells for $240 per pound, and Product B sells for $20 per pound.
Required
a. Based on relative sales values at the split-off point, allocate joint costs to Products A and B.
b. Under what condition would the cost allocated using relative sales values be greater than the selling price of a joint product?
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