The Trece Co. manufactures joint products X and Y as well as by-product Z. Cumulative costs data for the period show P204,000 representing 20,000 units completed processed through the Refining Department at an average cost of P10.20. Costs are assigned to X and Y by the market value method which considers further processing costs in subsequent operations. Additional data: Z X Y Quantity processed 2,000 units 8,000 units 10,000 units Sales price per unit P5 P20 P25 Further processing cost per unit 1 5 7 Marketing and administrative expense per unit 1 Operating profit per unit 1 Required: a. Assuming by-product value is material determine the joint cost allocated to Z using Net realizable value method and joint cost to X and Y. b. Assuming by-product value is immaterial and insignificant, what is the joint cost allocated to X and Y.
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.
The Trece Co. manufactures joint products X and Y as well as by-product Z. Cumulative costs data for the period show P204,000 representing 20,000 units completed processed through the Refining Department at an average cost of P10.20. Costs are assigned to X and Y by the market value method which considers further processing costs in subsequent operations. Additional data:
Z X Y
Quantity processed 2,000 units 8,000 units 10,000 units
Sales price per unit P5 P20 P25
Further
Marketing and administrative expense per unit 1
Operating profit per unit 1
Required: a. Assuming by-product value is material determine the joint cost allocated to Z using Net realizable value method and joint cost to X and Y.
b. Assuming by-product value is immaterial and insignificant, what is the joint cost allocated to X and Y.
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