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Topic
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LM Enterprises produces two products in a common production process, each of which is processed
further after the split-off point. Joint costs incurred for the current month are $36,000. The following
information for the current month was also gathered:
Product Units produced Units sold Separable costs Selling price per unit
L 10,000 9,500 $20,000 $ 8
M 5,000 4,000 40,000 20
What amount would be the joint cost allocated to product M, assuming that LM Enterprises uses the
estimated net realizable value method to allocate costs?
a. $20,000
b. $12,000
c. $15,000
d. $18,000
Explanation
Choice “d” is correct.
I don’t know how to get the answer D, but I keep getting the answer C.
My calculation is
NRV for L: 9,500 x 8 -20,000= 56,000
NRV for M: 4,000 x 20 – 40,000 = 40,000
40/96 * 36,000 = $15,000
Can anybody show me how to get D?
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