ABC Company operates a production process to convert a single material into three separate items, referred to as items A, B and C. Products A and B are ready for sale immediately upon split-off without further processing. Product C, however, is processed further before being saleable. During 2022, the selling prices of the items and the total amounts sold were as follows:Product A – 168 units at P1,200 per unitProduct B – 480 units at P900 per unitProduct C – 672 units at P600 per unit Total manufacturing costs for the year amounted to P900,000 which includes further processing costs of product C of P200,000. There were no beginning inventories while a physical count revealed the following unsold units at the end of 2022: A, 132 units, B, 120 units, C, 28 units. How much is the ending inventory to be reported for product A using the physical measures approach? How much is the ending inventory to be reported for product B using the physical measures approach?

The question is related to Joint Products. The physical measure approach is based on the assumption…

Answered: ABC Company operates a production…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ABC Company operates a production process to convert a single material into three separate items, referred to as items A, B and C. Products A and B are ready for sale immediately upon split-off without further processing. Product C, however, is processed further before being saleable. During 2022, the selling prices of the items and the total amounts sold were as follows:

Product A – 168 units at P1,200 per unit
Product B – 480 units at P900 per unit
Product C – 672 units at P600 per unit

Total manufacturing costs for the year amounted to P900,000 which includes further processing costs of product C of P200,000.

There were no beginning inventories while a physical count revealed the following unsold units at the end of 2022: A, 132 units, B, 120 units, C, 28 units.

How much is the ending inventory to be reported for product A using the physical measures approach?
How much is the ending inventory to be reported for product B using the physical measures approach?

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