Question: EXERCISE 7-16. Joint Cost Allocation with Relative Sales Values Baxter Products produces two joint products (A and B). Prior to the split-off point, the company

EXERCISE 7-16. Joint Cost Allocation with Relative Sales Values Baxter Products produces two joint products (A and B). Prior to the split-off point, the company incurs costs of $1,000. Product A weighs 20 pounds and product B weighs 40 pounds.

Product A sells for $50 per pound and product B sells for $10 per pound.

Required

a. Based on relative sales values at the split-off point, allocate joint costs to products A andB.

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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