Example with Byproduct and Separable Costs: Lond Co. produces joint products Jana and Reta, together with byproduct Bynd. Jana is sold at split-off, whereas Reta and Bynd undergo additional processing. Production data pertaining to these products for the year ended December 31, 20x1 were as follows: Jana Reta Bynd Total Joint costs Variable $88,000 Fixed 148,000 Separable costs Variable $120,00 $3,000 123,000 Fixed 90,000 2,000 92,000 Production in Pounds 50,000 40,000 10,000 100,000 Sales price per pound $4.00 $7.50 $1.10 There were no beginning or ending inventories. No materials are spoiled in production. Variable costs change in direct proportion to production volume. The net realizable value of the byproduct (Bynd) is deducted from joint costs. Joint costs are allocated to joint products to achieve the same gross margin percentage for each joint product. Required: Allocate joint costs using: 1. Unit of measure method. 2. Net realizable value method. 3. Constant gross margin percent method.

Example with Byproduct and Separable Costs: Lond Co. produces joint products Jana and Reta, together with byproduct Bynd. Jana is sold at split-off, whereas Reta and Bynd undergo additional processing. Production data pertaining to these products for the year ended December 31, 20x1 were as follows: Jana Reta Bynd Total Joint costs Variable $88,000 Fixed 148,000 Separable costs Variable $120,00 $3,000 123,000 Fixed 90,000 2,000 92,000 Production in Pounds 50,000 40,000 10,000 100,000 Sales price per pound $4.00 $7.50 $1.10 There were no beginning or ending inventories. No materials are spoiled in production. Variable costs change in direct proportion to production volume. The net realizable value of the byproduct (Bynd) is deducted from joint costs. Joint costs are allocated to joint products to achieve the same gross margin percentage for each joint product. Required: Allocate joint costs using: 1. Unit of measure method. 2. Net realizable value method. 3. Constant gross margin percent method.

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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Question

Example with Byproduct and Separable Costs: Lond Co. produces joint
products Jana and Reta, together with byproduct Bynd. Jana is sold at
split-off, whereas Reta and Bynd undergo additional processing.
Production data pertaining to these products for the year ended
December 31, 20x1 were as follows:
Jana
Reta
Bynd
Total
Joint costs
Variable
$88,000
Fixed
148,000
Separable costs
Variable
$120,00
$3,000
123,000
Fixed
90,000
2,000
92,000
Production in Pounds
50,000
40,000
10,000
100,000
Sales price per pound
$4.00
$7.50
$1.10
There were no beginning or ending inventories. No materials are spoiled
in production. Variable costs change in direct proportion to production
volume. The net realizable value of the byproduct (Bynd) is deducted
from joint costs. Joint costs are allocated to joint products to achieve the
same gross margin percentage for each joint product.
Required: Allocate joint costs using:
1. Unit of measure method.
2. Net realizable value method.
3. Constant gross margin percent method.

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