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1. Joint cost is ₱300,000. Products: A (600 units), B (400 units). Allocate joint costs using the physical units method.

2. Products X and Y: X: 500 units at ₱50/unit, Y: 300 units at ₱80/unit. Total joint costs = ₱100,000. Allocate using sales value at split-off.

3. A company incurs ₱500,000 joint costs. Product M sells for ₱100,000 after ₱20,000 further processing. Product N sells for ₱250,000 after ₱50,000 further processing. Allocate joint cost using the NRV method.

4. Joint cost: ₱200,000. Product P: 1,200 units; Product Q: 800 units. Use the physical unit method.

5. Products A, B, C: A: 40%, B: 35%, C: 25% (based on sales). Joint cost = ₱400,000. Allocate by relative sales value.

6. A by-product earns ₱10,000. Joint cost = ₱150,000. Under the cost reduction method, what is the adjusted joint cost?

7. A by-product is sold for ₱12,000. Prepare a journal entry if treated as other income.

8. Compute profit if after further processing: Sales = ₱300,000, Additional costs = ₱40,000, Allocated joint cost = ₱200,000.

9. Sell or process further: Split-off price = ₱70/unit, After processing price = ₱90/unit, Processing cost = ₱25/unit. Decision?

Answer :

Let's break down and solve each part of the question step by step:

  1. Allocate joint costs using the physical units method:

    • Total joint cost: ₱300,000
    • Products: A (600 units), B (400 units)

    To use the physical units method, allocate the joint cost based on the proportion of each product's units to the total units produced.

    Total units produced: 600 + 400 = 1,000 units

    Allocation for Product A:
    [tex]\text{Joint cost for A} = \frac{600}{1000} \times 300,000 = 180,000[/tex]

    Allocation for Product B:
    [tex]\text{Joint cost for B} = \frac{400}{1000} \times 300,000 = 120,000[/tex]

  2. Allocate using sales value at split-off:

    • Total joint costs: ₱100,000
    • Product X: 500 units at ₱50/unit
    • Product Y: 300 units at ₱80/unit

    Sales value for Product X: 500 units

₱50 = ₱25,000

Sales value for Product Y: 300 units
₱80 = ₱24,000

Total sales value: ₱25,000 + ₱24,000 = ₱49,000

Allocation for Product X:
[tex]\text{Joint cost for X} = \frac{25,000}{49,000} \times 100,000 \approx 51,020.41[/tex]

Allocation for Product Y:
[tex]\text{Joint cost for Y} = \frac{24,000}{49,000} \times 100,000 \approx 48,979.59[/tex]

  1. Allocate joint cost using NRV method:

    • Joint costs: ₱500,000
    • Product M: sells for ₱100,000 after ₱20,000 processing
    • Product N: sells for ₱250,000 after ₱50,000 processing

    NRV for Product M: ₱100,000 - ₱20,000 = ₱80,000

    NRV for Product N: ₱250,000 - ₱50,000 = ₱200,000

    Total NRV: ₱80,000 + ₱200,000 = ₱280,000

    Allocation for Product M:
    [tex]\text{Joint cost for M} = \frac{80,000}{280,000} \times 500,000 \approx 142,857.14[/tex]

    Allocation for Product N:
    [tex]\text{Joint cost for N} = \frac{200,000}{280,000} \times 500,000 \approx 357,142.86[/tex]

  2. Use physical unit method:

    • Joint cost: ₱200,000
    • Product P: 1,200 units
    • Product Q: 800 units

    Total units: 1,200 + 800 = 2,000 units

    Allocation for Product P:
    [tex]\text{Joint cost for P} = \frac{1,200}{2,000} \times 200,000 = 120,000[/tex]

    Allocation for Product Q:
    [tex]\text{Joint cost for Q} = \frac{800}{2,000} \times 200,000 = 80,000[/tex]

  3. Allocate by relative sales value:

    • Joint cost: ₱400,000
    • Product A: 40%
    • Product B: 35%
    • Product C: 25%

    Allocation for Product A:
    [tex]\text{Joint cost for A} = 0.40 \times 400,000 = 160,000[/tex]

    Allocation for Product B:
    [tex]\text{Joint cost for B} = 0.35 \times 400,000 = 140,000[/tex]

    Allocation for Product C:
    [tex]\text{Joint cost for C} = 0.25 \times 400,000 = 100,000[/tex]

  4. Cost reduction method:

    • By-product earns: ₱10,000
    • Joint cost: ₱150,000

    Adjusted joint cost:
    [tex]\text{Adjusted joint cost} = 150,000 - 10,000 = 140,000[/tex]

  5. Journal entry for by-product sold as other income:

    • By-product sold for: ₱12,000

    Journal Entry:
    Debit: Cash ₱12,000
    Credit: Other Income ₱12,000

  6. Compute profit after further processing:

    • Sales: ₱300,000
    • Additional costs: ₱40,000
    • Allocated joint cost: ₱200,000

    Profit:
    [tex]\text{Profit} = 300,000 - 40,000 - 200,000 = 60,000[/tex]

  7. Sell or process further decision:

    • Split-off price: ₱70/unit
    • After processing price: ₱90/unit
    • Processing cost: ₱25/unit

    Net benefit of processing further:
    [tex]\text{Additional revenue} = 90 - 70 = 20[/tex]
    [tex]\text{Net benefit} = 20 - 25 = -5[/tex]

    Since the net benefit is negative (-₱5), it is better to sell at split-off for ₱70/unit.

These calculations help allocate joint costs in various business scenarios, aiding in decision-making regarding product pricing and further processing.

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