Fantasy Manufacturing Produces Three Products in a Joint Operation Required:
(A)Allocate the Joint Costs Using the Relative Sales Value

question 9

Essay

Fantasy Manufacturing produces three products in a joint operation.Information regarding the products appears below: $$\begin{array} { | l | r | r | r | r | } \hline & \text { Item1 } & \text { Item2 } & \text { Item 3 } & \text { Total } \\\hline \text { Units Proouced } & 20,000 & 25,000 & 10,000 & 55,000 \\\hline \begin{array} { l } \text { Sales Value at } \\\text { Split-off }\end{array} & \$ 150,000 & \$ 50,000 & \$ 20,000 & \$ 220,000 \\\hline \begin{array} { l } \text { Additional costs if } \\\text { Processed further }\end{array} & \$ 10,000 & \$ 30,000 & \$ 5,000 & \$ 45,000 \\\hline \begin{array} { l } \text { Sales Value if } \\\text { Processed Further }\end{array} & \$ 170,000 & \$ 90,000 & \$ 28,000 & \$ 288,000 \\\hline \text { Joint Costs } & & & & \$ 100,000 \\\hline\end{array}$$
Required:
(a)Allocate the joint costs using the relative sales value at split-off method.(b)Allocate the joint costs using the constant gross margin percentage method.

---

Definitions:

Adjusted Multiple Coefficient

A measure in statistics used to determine the goodness of fit of a model, adjusted for the number of predictors in the model.

SSE

Sum of Squared Errors, a measure used in statistical data analysis to represent the discrepancy between the data and an estimation model.

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression (e.g., the 4 in 4x).

Television Advertisement

A form of marketing communication broadcasted to promote or sell a product, service, or idea through television.