A factory producing article X also produces a by-product Y which is further processed into finished product. The joint cost of manufacturing is given below:    Material   RO 8,000 Labor   RO 4,000 Overheads RO 2,000   Subsequent costs are given below:   X Y Material      RO 2,000 RO 4,000 Labor  RO 4,000        RO 3,000 Overheads RO 2,400        RO 2,600   Sales value for X is RO 20,000 and Y is RO 30,000 Estimated profits on selling prices are 40% for X and 30% for Y. Assume that selling and distributing expenses are in proportion of subsequent cost of material. a. Show how you would apportion joint cost of manufacture. b. Prepare a statement showing cost of production of X and Y.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

A factory producing article X also produces a by-product Y which is further processed into finished product. The joint cost of manufacturing is given below:   

Material  

RO 8,000

Labor  

RO 4,000

Overheads

RO 2,000

 

Subsequent costs are given below:

 

X

Y

Material     

RO 2,000

RO 4,000

Labor 

RO 4,000       

RO 3,000

Overheads

RO 2,400       

RO 2,600

 

Sales value for X is RO 20,000 and Y is RO 30,000
Estimated profits on selling prices are 40% for X and 30% for Y. Assume that selling and distributing expenses are in proportion of subsequent cost of material.
a. Show how you would apportion joint cost of manufacture.
b. Prepare a statement showing cost of production of X and Y.

Expert Solution
steps

Step by step

Solved in 3 steps with 4 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education