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 allocation of joint cost for August for product Z (use two decimal places)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
JOINT AND BY-PRODUCT
PROBLEM 1
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 |
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 allocation of joint cost for August for product Z (use two decimal places)
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