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A Chemical Company manufactures joint products Pep and Vim, and a by-product Zest. Costs are assigned to the joint products by the market value method,

A Chemical Company manufactures joint products Pep and Vim, and a by-product Zest. Costs are assigned to the joint products by the market value method, which considers further processing costs in subsequent operations. For allocating cost to the by-product, the market value or reversal cost method is used. Total manufacturing costs for 10,000 units were P172,000 during the quarter. Production and cost data follow:

Pep

Vim

Zest

Units Produced

5,000

4,000

1,000

Sales price per unit

50.00

40.00

5.00

Further processing cost per unit

10.00

5.00

0.00

Selling & Adm. Expense per unit

0.00

0.00

2.00

Operating Profit per unit

0.00

0.00

1.00

REQUIREMENTS:

1. What is the gross profit for Pep?

2. What is the value of Zest to be deducted from the joint cost?

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