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GG Products, Inc., prepares tips and stems from a joint process using asparagus. It produced 215,000 units of tips having a sales value at the split-off point of $75,600. It produced 215,000 units of stems having a sales value at split-off of $32,400. Using the net realizable value method, the portion of the total joint product costs allocated to tips was $45,500. Required: Compute the total joint product costs before allocation. (Do not round intermediate calculations.)

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Answer:

The correct answer is $65,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

Total joint product costs of Tip = $45,500

Sales value of tip at split-off = $75,600

NRV of total production = $75,600 +$32,400 = $108,000

So, we can calculate the total joint cost by using following data:

Total joint cost = $45,500 × ($108,000 ÷ $75,600)

= $45,500 × 1.43

= $65,000

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