ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Two joint products, A and B, share joint costs of $120,000. Output is 4,000 units of A selling at $20 each and 2,000 units of B selling at $40 each, both sold at the split-off point without further processing. Using the sales value at split-off method, what is the joint cost apportioned to A?
A is apportioned $60,000. Both products have a split-off sales value of $80,000, so each carries half of the $120,000 joint costs under the sales value at split-off method, not the two-thirds that physical units would give.
- A$80,000
- B$60,000Correct
- C$40,000
- D$120,000
Explanation
Sales value of A = 4,000 x 20 = $80,000; B = 2,000 x 40 = $80,000. Total is $160,000, so A bears 50%: 120,000 x 0.5 = $60,000. Using physical units would give $80,000, which is wrong for this method.
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