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Lowe Co. manufactures products A and B from a joint process. Sales value at split-off was $700,000 for 10,000 units of A and $300,000 for 15,000 units of B. Using the sales value at split-off approach, joint costs properly allocated to A were $140,000. Total joint costs were

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Answer:

$200,000

Explanation:

Using the sales value at split-off approach, the allocated costs are proportional to the percentage of total sales that each product is responsible for generating. The percentage of sales that derive from product A are:

[tex]A = \frac{700,000}{700,000+300,000}= 70\%[/tex]

Therefore, the total joint costs were:

[tex]C = \frac{C_A}{A}\\ C=\frac{140,000}{0.7}\\ C=\$200,000[/tex]

Total joint costs were $200,000.

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