Problem
In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative sales value at split-off. The company can choose to process each of the products further rather than sell the fabric at split-off. Information related to these products follows.
Dresses Jackets Blouses Total
Number of units produced 10,000 16,000 6,000 32,000
Joint cost allocated ? $138,000 ? $360,000
Sales values at split-off point ? $230,000 $ 80,000 $600,000
Additional costs of processing further $ 26,000 $ 20,000 $ 78,000 $124,000
Sales values after all processing $300,000 $268,000 $210,000 $778,000
a. What amount of joint cost should be allocated to dresses and blouses?
b. What is the sales values at the split-off point for dresses?
c. Should any of the products be processed beyond the split-off point? Show computations.
d. If 12,000 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.