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Problem 1: 1.1

The document contains examples and problems related to allocating joint costs between joint products. In problem 1, joint costs are allocated to products A and B based on their relative sales values at split-off. Costs are then recalculated based on net realizable values and selling expenses to determine profitability. Problem 2 involves joint products A, B, and a by-product C. Joint costs are allocated to A and B based on their approximate net realizable values. Problem 3 covers the allocation of general factory administration overhead and factory maintenance overhead between fabrication and assembly departments. Different allocation rates are calculated and applied.

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Janna Mari Frias
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101 views

Problem 1: 1.1

The document contains examples and problems related to allocating joint costs between joint products. In problem 1, joint costs are allocated to products A and B based on their relative sales values at split-off. Costs are then recalculated based on net realizable values and selling expenses to determine profitability. Problem 2 involves joint products A, B, and a by-product C. Joint costs are allocated to A and B based on their approximate net realizable values. Problem 3 covers the allocation of general factory administration overhead and factory maintenance overhead between fabrication and assembly departments. Different allocation rates are calculated and applied.

Uploaded by

Janna Mari Frias
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 7

AFAR

WEEK 8

9312 - Joint Products


Problem 1:
1.1
No. of Barrels for A 800
No. of Barrels for B 1,000
1,800

Joint cost allocated to A:


(90,000 x 8/18) = 40,000

1.2
Relative sales value at split-off of A 80,000
Relative sales value at split-off of B 70,000
150,000

Relative sales value at split-off of A:


100 x 800 = 80,000

Relative sales value at split-off of B:


70 x 1,000 = 70,000
Sales of A:
Joint cost allocated to A: 100 x 800 = 80,000
90,000 x 80/150 = 48,000
Sales of B:
Joint cost allocated to B: 70 x 1,000 = 70,000
90,000 x 70/150 = 42,000

A B
Sales 80,000 70,000
COGS -48,000 -42,000
Gross Profit 32,000 28,000

1.3
NRV at split-off of A 32,000
NRV at split-off of B 50,000
82,000

NRV at split-off of A: Sales of A:


[(100 - 60) x 800] = 32,000 100 x 800 = 80,000
NRV at split-off of B: Sales of B:
[(70 - 20) x 1,000] = 50,000 70 x 1,000 = 70,000

Joint cost allocated to A: Selling Expense of A:


90,000 x 32/82 = 35,122 60 x 800 = 48,000

Joint cost allocated to B: Selling Expense of B:


90,000 x 50/82 = 54,878 20 x 1,000 = 20,000

A B
Sales 80,000 70,000
COGS -35,122 -54,878
Gross Profit 44,878 15,122
Selling Expense -48,000 -20,000
Net Income/(Loss) -3,122 -4,878

1.4
Approx. NRV of A 80,000
Approx. NRV of B 80,000
160,000

Approx. NRV of A: Sales of A:


[(150 - 20 - 30) x 800] = 80,000 150 x 800 = 120,000

Approx. NRV of B: Sales of B:


[(120 - 30 -10) 1,000] = 80,000 120 x 1,000 = 120,000

Joint cost allocated to A: Cost of goods sold of A:


(90,000 x 80/160) = 45,000 [45,000 + (20 x 800)] = 61,000

Joint cost allocated to B: Cost of goods sold of B:


(90,000 x 80/160) = 45,000 [45,000 + (30 x 1,000)] = 75,000

Selling expense of A: (30 x 800) = 24,000


Selling expense of B: (10 x 1,000) = 10,000

A B
Sales 120,000 120,000
COGS -61,000 -75,000
Gross Profit 59,000 45,000
Selling Expense -24,000 -10,000
Net Income/(Loss) 35,000 35,000

Problem 2:
2.1
Approx. NRV of A 300,000
Approx. NRV of B 100,000
400,000

NRV of By-product C:
[(30 x 200) - 4,000] = 2,000

Cost per unit of By-product C: Joint cost allocated to A:


2,000 / 200 = 10 (200,000 x 3/4) = 150,000

Sales of A: Cost per unit of A:


[(43.75 x 6,400) + (10 x 150)] = 281,500 [(150,000 + 50,000) / 8,000] = 25

Cost of Goods sold of A:


25 x 6,400 = 160,000
A
Sales 281,500
COGS -160,000
Gross Profit 121,500

2.2
Approx. NRV. Of A 300,000
Approx. NRV. Of B 100,000
400,000

NRV of By-product C: Joint cost allocated to B:


[(30 x 200) - 4,000] = 2,000 200,000 x 1/4 = 50,000

Cost per unit og By-product C: Cost per unit of B:


2,000/200 = 10 [(50,000 + 30,000) / 2,000 = 40

Sales of B: Cost of goods sold of B:


65 x 1,800 = 117,000 40 x 1,800 = 72,000

B Other Income of B:
Sales 117,000 10 x 150 = 1,500
COGS -72,000
Gross Profit 45,000
Other Income 1,500
Net Income 46,500

2.3
Approx. NRV. Of A 300,000
Approx. NRV. Of B 100,000
400,000
NRV of By-product C: Joint cost allocated to A:
[(30 x 200) - 4,000] = 2,000 198,000 x3/4 = 148,500

Sales of A: Cost per unit of A:


(43,75 x 6,400) = 280,000 [(148,500 + 50,000) / 8,000] = 24.8125

Adjusted joint cost: Cost of goods sold of A:


200,000 - 2,000 = 198,000 24.8125 x 6,400 = 158,800

A
Sales 280,000
COGS -158,800
Gross Profit 121,200

Problem 3:
3.1
Fabrication Assembly
Gen. Fadmin 46.25/90 43.75/90
Fmaintenance 88/160 72/160

Gen. Fadmin OH allocated to Fabrication: Fmaintenance OH allocated to Fabrication:


160,000 x 46.25/90 = 82.222 425,000 x 88/160 = 233,750

Gen. Fadmin OH allocated to Assembly: Fmaintenance OH allocated to Assembly:


160,000 x 43.75/90 = 77,778 425,000 x 72/160 = 191,250

Fabrication Assembly
Gen. Fadmin 82,222 77,778
Fmaintenance 233,750 191,250
315,972 269,028

3.2
Fmaintenance Gen. Fadmin Fabrication
Fmaintenance 40/200 88/200
Gen. Fadmin 46.25/90

Fmaintenance Gen. Fadmin Fabrication


Fmaintenance 425,000 160,000 6,730,000
Gen. Fadmin -425,000 85,000 187,000
-245,000 125,903
7,042,903

3.3
Fmaintenance Gen. Fadmin Fabrication
Fmaintenance 0.20 0.44
Gen. Fadmin 0.10 0.4625

FM = 425,000 + .10FA
FA = 160,000 + .20FN

FM = 425,000 + .10 (160,000 + .20FM) FA = 160,000 + .20 (450,000)


FM = 425,000 + 16,000 + .02FM FA = 160,000 + 90,000
FM = 441,000 +.02FM FA = 250,000
FM = (441,000 + .98) = 450,000
ted to Fabrication:

ted to Assembly:

Assembly
72/200
43.75/90

Assembly
4,850,000
153,000
119,097
5,122,097

Assembly
0.36
0.4375

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