The JYD Company processes apples into pies, spread, and dressing. During the second quarter of 2021, the joint cost of processing the apples was P750,000. There were no beginning inventories for the quarter. Production and sales value information for the quarter were as follows: Assume the use of the estimated net realizable value method. Products Units Produced SV @ split-off Separable costs Final Selling Price Ending Units Pies 20,000 P12/unit P20/unit P35/unit 7,000 Spread 50,000 15/unit 10/unit 28/unit 24,000 Dressing 25,000 9/unit 8/unit 20/unit 10,000 The total value of ending inventory at the end of the quarter is: Group of answer choices b. P1,140,000 d. P788,500 c. P721,500 a. P750,000
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
The JYD Company processes apples into pies, spread, and dressing. During the second quarter of 2021, the joint cost of processing the apples was P750,000. There were no beginning inventories for the quarter. Production and sales value information for the quarter were as follows: Assume the use of the estimated net realizable value method.
Products Units Produced SV @ split-off Separable costs Final Selling Price Ending Units
Pies 20,000 P12/unit P20/unit P35/unit 7,000
Spread 50,000 15/unit 10/unit 28/unit 24,000
Dressing 25,000 9/unit 8/unit 20/unit 10,000
The total value of ending inventory at the end of the quarter is:
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