Walman Corp. manufactures products X, Y, and Z from a joint production process. Joint costs are allocated to products based on relative sales value of the products at the split-off point. Additional information is as follows:   X Y Z TotalUnits produced 14,000 10,000 6,000 30,000Allocated joint costs$204,000$90,000$66,000$360,000Sales value at split-off ? 150,000 110,000 600,000Additional costs for further processing 38,000 30,000 22,000 90,000Sales value if processed further 348,000 185,000 147,000 680,000          Product X's sales value at the split-off point is:

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Asked Dec 3, 2019
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  1. Walman Corp. manufactures products X, Y, and Z from a joint production process. Joint costs are allocated to products based on relative sales value of the products at the split-off point. Additional information is as follows:

 

 

 

X

 

Y

 

Z   Total

Units produced

 

14,000

 

10,000

 

6,000

 

30,000

Allocated joint costs

$

204,000

$

90,000

$

66,000

$

360,000

Sales value at split-off

 

?

 

150,000

 

110,000

 

600,000

Additional costs for further processing

 

38,000

 

30,000

 

22,000

 

90,000

Sales value if processed further

 

348,000

 

185,000

 

147,000

 

680,000

                 

 

Product X's sales value at the split-off point is:

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Expert Answer

Step 1

Definition of Split-Off

A split-off is a corporate reorganization method in which a parent company divests a business unit using specific structured terms. In split-off, the parent company offers shareholders the option to keep their current shares or exchange them for shares of divesting company.

Step 2

Following is the calculation of product X’s sale...

Total Sales's Value at split-off -
Product Y's sales value at the split-off point
|- Product Z's sales value at the split-off point
Product X's Sales Value
| at split-off point
$600,000-$150,000 -$110, 000
=$340,000
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Total Sales's Value at split-off - Product Y's sales value at the split-off point |- Product Z's sales value at the split-off point Product X's Sales Value | at split-off point $600,000-$150,000 -$110, 000 =$340,000

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