Rocky Mountain Company Produces Two Products (X and Y) from a Joint

question 38

Multiple Choice

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as follows: $\begin{array}{c}\begin{array}{c}\\\\\underline{\text { Product} } \\\mathrm{X} \\\mathrm{Y} \end{array}\begin{array}{c}\\\text {Units}\\\underline{\text {Made}}\\9,000\\6,000\end{array}\begin{array}{c}\\\text {Sales Value}\\\underline{\text { at Split-off }}\\\$ 40,000 \\80,000\end{array}\begin{array}{cc}\quad\text { If Processed Further } \\\text { Sales } & \text { Separable } \\\underline{\text { Value }} &\underline{ \text { Costs} } \\\$ 78,000 & \$ 10,500 \\90,000 & 7,500\end{array}\end{array}$

If the joint production costs are allocated based on the relative-sales-value method, the amount of joint cost assigned to product X would be:

• A) $20,000.
• B) $27,000.
• C) $33,000.
• D) $40,000.
• E) None of the other answers are correct.

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Definitions:

Low Frequency

Pertains to waves, such as sound or electromagnetic waves, that have a relatively low rate of oscillation or cycles per second.

Place Theory

A theory in psychology that proposes the perception of sound depends on where each component frequency produces vibrations along the basilar membrane of the inner ear.

High-Pitched Sounds

Sounds that have a high frequency, typically perceived as "shrill" by the human ear.

Hair Cells

Sensory cells located in the inner ear, vital for the conversion of sound waves into electrical signals for hearing and helping in the maintenance of balance.