8/9/2019 Byproduct and Joint Cost Exercises

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nit sales price !(.&$ !%.%$ !%.$$

0euired:1. Allocate the 9oint cost to the three products using the mar+et value method.2. uppose that product could be sold at the split o- point for !#.#$. 5ould that be a

good idea how calculations.

#. Detty company manufactures three products A, B and C as a result of a 9oint process.

uring ctober, 9oint processing costs totaled !2'',$$$. etails regarding each of thethree products show:A B C

nits produced 1,$$$ &,$$$ #,$$$nits sold '$$ 2,#$$ (,&$$?urther processing costs !2#,$$$ !%$,$$$ !1$#,$$$ales price per unit !1$$ !'$ !#$

0euired:1. Compute the cost assigned to the ending inventory of each product and in total,

using the mar+et value method for 9oint product cost allocation. ;here were no unitsin nished goods on ctober 1

2. Customer have been found who would be willing to buy all of the output of each

product at the split o- point for the following prices: A, !%$E B. !%#E C, !2#. howwhich of the products should be sold at the split of point.

&. 5ould your answer to reuirement 2 change if !roduct BFs further processing cost of!%$,$$$ included !1',$$$ of allocated ed costs 5hy or why not

(. Gow suppose the !%$,$$$ cost of BFs further processing includes !1',$$$ ofallocated ed costs, and the facilities that would be used to further process B havebeen alternative use. 3f B is not processed further, the alternative use of thesefacilities will generate revenue of !%,$$$ and variable costs of !1,$$$. hould B beprocessed further

#. !lano Company manufactures three products A, B and C from a 9oint process. ;he9oint costs for Hanuary total !1$$,$$$. Additional Hanuary information follows:

Product #uantity

Processin$

Cost after

S%P

Ulti&ate

Market

ValueA &,$$$ !2$,$$$ !%$,$$$B (,$$$ &$,$$$ 11$,$$$C &,$$$ #$,$$$ 1'$,$$$

0euired:1. Compute the total production cost for each product using the average unit cost

method.2. Compute the total production cost for each product using the mar+et value

method

%. )ichael 3nc. produces four 9oint products having a manufacturing cost of !"$,$$$ atthe split o- point. ;he following data pertain to these products.

Units

Produced

Ulti&ate

Market Value '

Unit

Processin$

cost after

S%P

(ei$ht

)actorI #,$$$ !#.#$ !1,#$$ &.$ pointsL 2$,$$$ 1.%$ &,$$$ 2.$ points) 1#,$$$ 1.#$ 2,#$$ (.$ points

G 1$,$$$ &.$$ #,$$$ 2.# points0euired: allocate 9oint products cost using:

a. Average unit cost methodb. 5eighted average methodc. )ar+et value method

8/9/2019 Byproduct and Joint Cost Exercises

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1$. ;he following data appear in the records for 0ec+lonville Company for ?ebruary:Process

+ , nit data: Beginning wor+ in process inventory