JOINT AND BY-PRODUCT Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and Z, and by-product X. The company uses the net realizable value of its joint products to allocate joint production costs. The by-product is valued for inventory purposes at its market value less its disposal cost, and this value is used to reduce the joint production cost of P2,015,000. Information regarding the company’s August 2020 operations are presented below: In liters Y Z X Finished Goods inventory, August 1 30,000 100,000 40,000 August Sales 1,340,000 760,000 240,000 August Production 1,600,000 800,000 200,000 In Peso       Further Processing cost 1,400,000 1,520,000   Final Sales value per Liter 10 14   Sales value per liter at split off     2.40 Disposal Cost per liter     0.40   Required: Calculate the by-product income Calculate the adjusted joint cost for allocation for August Calculate the allocation of joint cost for August for products Y and Z Calculate the unit cost per product and value of closing inventory The company has an opportunity to sell product Z at split off for P10 per liter. Prepare an analysis to show whether Z should be sold at split off point or further processing. Split your joint costs between join products using physical unit method

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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JOINT AND BY-PRODUCT

Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and Z, and by-product X. The company uses the net realizable value of its joint products to allocate joint production costs. The by-product is valued for inventory purposes at its market value less its disposal cost, and this value is used to reduce the joint production cost of P2,015,000. Information regarding the company’s August 2020 operations are presented below:

In liters

Y

Z

X

Finished Goods inventory, August 1

30,000

100,000

40,000

August Sales

1,340,000

760,000

240,000

August Production

1,600,000

800,000

200,000

In Peso

 

 

 

Further Processing cost

1,400,000

1,520,000

 

Final Sales value per Liter

10

14

 

Sales value per liter at split off

 

 

2.40

Disposal Cost per liter

 

 

0.40

 

Required:

  • Calculate the by-product income
  • Calculate the adjusted joint cost for allocation for August
  • Calculate the allocation of joint cost for August for products Y and Z
  • Calculate the unit cost per product and value of closing inventory
  • The company has an opportunity to sell product Z at split off for P10 per liter. Prepare an analysis to show whether Z should be sold at split off point or further processing.
  • Split your joint costs between join products using physical unit method

 

 

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