# Problem-4: Three methods of allocating joint costs

Posted in: Joint products and by-products (problems)

The Sun Inc. produces four joint products – product A, product B, product C and product D. The joint production cost at split-off point is $70,000. The data for the month of April is given below:

**Required:** Allocate joint production cost using:

- The market value method
- The average unit cost method
- The weighted average method

## Solution

### 1. The market value method:

*The joint cost is 70% of the hypothetical market value.

### 2. Average unit cost method:

*Joint cost/Total number of units produced

= $70,000/50,000

= $1.40 per unit

### 3. Weighted average method:

*Joint cost/Total number of weighted units

= $70,000/140,000

= $.50 per weighted unit

One Comment on Problem-4: Three methods of allocating joint costsThe joint cost is 70 % of the hypothetical market value at split-off and not 50% .in the first table , it is just a typing error