The Alex Corporation produces three outputs: X, Y, ands Z from one input. The sales value of X at split off is $100,000. The sales value of Y at split off is $200,000 and the net realizable value of Z is $20,000. Final sales values are $200,000, $300,000 and $25,000 for X, Y, and Z, respectively. However, these prices are subject to erratic change. Additional processing costs for X, Y, and Z are $50,000, $75,000 and $10,000, respectively. The number of units of each product are 60,000 of X, 60,000 of Y and 30,000 of Z. The total joint costs are $150,000. (You may round your answers to the nearest dollar.) 

1. Diagram the joint cost process using the values above, as I did in class on our examples. (2 points) Write clearly!!!

2. Allocate joint costs to the three products using (each answer is worth 3 points – Circle your joint cost allocation for each product)

A. Physical Measures Method:

B. Sales Value at Split off Method:

C. Net Realizable Value Method:

D. Constant Gross Margin Method:

3. Which method do you prefer as a manager of the product if you wish to maximize profits? (3 points - show on your solution clearly)

X:

Y:

Z:

Answer rating: 100% (QA)

1 Allocation of Joint Cost using a Physical Measures Method Allocation per unit Joint CostTotal unit Allocation per unit 150000150000 unit 100 pu Prod... View the full answer