ABC Company produces two main products and a by-product out of a joint process. The ratio of output quantities to input quantities of direct material used in the joint process remains consistent from month to month. ABC employs the physical units, method to allocate joint pro- duction costs to the two main products. The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are allocated to the main products. Da- ta regarding ABC's operations for the current month are presented below. During the month, ABC incurred joint production costs of P2,520,000. The main products are not mar- ketable at the split-off point and, thus, have to be processed further. First Main Product Second Main Product 90,000 By-Product Monthly output in Kilos. Selling price per Kilo. Separable process costs.. 150,000 60,000 P30 P14 P2 P540,000 P660,000 The amount of joint production cost that ABC would allocate to the Second Main Product by using the physical units method to allocate joint production costs would be:
ABC Company produces two main products and a by-product out of a joint process. The ratio of output quantities to input quantities of direct material used in the joint process remains consistent from month to month. ABC employs the physical units, method to allocate joint pro- duction costs to the two main products. The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are allocated to the main products. Da- ta regarding ABC's operations for the current month are presented below. During the month, ABC incurred joint production costs of P2,520,000. The main products are not mar- ketable at the split-off point and, thus, have to be processed further. First Main Product Second Main Product 90,000 By-Product Monthly output in Kilos. Selling price per Kilo. Separable process costs.. 150,000 60,000 P30 P14 P2 P540,000 P660,000 The amount of joint production cost that ABC would allocate to the Second Main Product by using the physical units method to allocate joint production costs would be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![ABC Company produces two main products and a by-product out of a joint process. The ratio
of output quantities to input quantities of direct material used in the joint process remains
consistent from month to month. ABC employs the physical units method to allocate joint pro-
duction costs to the two main products. The net realizable value of the by-product is used to
reduce the joint production costs before the joint costs are allocated to the main products. Da-
ta regarding ABC's operations for the current month are presented below. During the
month, ABC incurred joint production costs of P2,520,000. The main products are not mar-
ketable at the split-off point and, thus, have to be processed further.
First Main Product Second Main Product
Monthly output in Kilos..
Selling price per Kilo..
Separable process costs.
By-Product
60,000
P2
90,000
P30
150,000
P14
P540,000
P660,000
The amount of joint production cost that ABC would allocate to the Second Main Product by
using the physical units, method to allocate joint production costs would be:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc320a9f-4feb-4fe3-8e09-a468c5a511b8%2F041c7200-8647-434f-939a-8caa1bbed638%2Fzieo9fi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ABC Company produces two main products and a by-product out of a joint process. The ratio
of output quantities to input quantities of direct material used in the joint process remains
consistent from month to month. ABC employs the physical units method to allocate joint pro-
duction costs to the two main products. The net realizable value of the by-product is used to
reduce the joint production costs before the joint costs are allocated to the main products. Da-
ta regarding ABC's operations for the current month are presented below. During the
month, ABC incurred joint production costs of P2,520,000. The main products are not mar-
ketable at the split-off point and, thus, have to be processed further.
First Main Product Second Main Product
Monthly output in Kilos..
Selling price per Kilo..
Separable process costs.
By-Product
60,000
P2
90,000
P30
150,000
P14
P540,000
P660,000
The amount of joint production cost that ABC would allocate to the Second Main Product by
using the physical units, method to allocate joint production costs would be:
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