Exercise 8-4. JOINT COST ALLOCATION - MARKET VALUE METHOD SP Company produces three products: S, I and P, as the result of initial joint processing plus separable processing after the split-off point. Records for July show the following: S I P Total Materials used - - - P150,000 Joint processing cost - - - 170,000 Further processing costs P50,000 P80,000 P70,000 - Units produced 6,000 12,000 6,250 - Units sold 4,000 9,000 4,250 - Unit sales price P 50.00 P 37.50 P 40.00 - Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 15 REQUIRED: Compute for the following The cost assigned to ending inventory for each product and in total, assuming no beginning inventory and using the market value method for joint cost allocation. In completing this requirement, disregard the information given in requirement [b] The difference in operating income if the company accepts an offer from a prospective customer who would be willing to buy all the output of Product I at the split-off point for P30 per unit.
Exercise 8-4. JOINT COST ALLOCATION - MARKET VALUE METHOD
SP Company produces three products: S, I and P, as the result of initial joint processing plus separable
processing after the split-off point. Records for July show the following:
S I P Total
Materials used - - - P150,000
Joint
Further processing costs P50,000 P80,000 P70,000 -
Units produced 6,000 12,000 6,250 -
Units sold 4,000 9,000 4,250 -
Unit sales price P 50.00 P 37.50 P 40.00 -
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 15
REQUIRED: Compute for the following
- The cost assigned to ending inventory for each product and in total, assuming no beginning
inventory and using the market value method for joint cost allocation. In completing this
requirement, disregard the information given in requirement [b]
- The difference in operating income if the company accepts an offer from a prospective
customer who would be willing to buy all the output of Product I at the split-off point for P30 per
unit.
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