Sandy Company Manufactures Three Products from a Joint Process Assume the Relative-Sales-Value Method of Allocating Joint Costs Is Used

question 18

Multiple Choice

Sandy Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:
$$\begin{array} { l l l } \text { Product } & \text { Units Produced } & \text { sales Value at Split-off } \\\hline X& 5,000 & \$ 70,000 \\Y & 3,000 & \$ 30,000 \\Z & 2,000 & \$ 100,000\end{array}$$
Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Z?

• A) $50,000
• B) $100,000
• C) $125,000
• D) $250,000

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Definitions:

IRRs

The Internal Rate of Return is the discount rate at which the net present value of all cash flows from a specific project is zero.

NPV

Net Present Value, a calculation used to determine the present value of a series of future cash flows by discounting them at a specific rate.

Cash Flows

The total amount of money being transferred into and out of a business, particularly concerning its operating, investing, and financing activities.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.