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Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and Z, and by-product X.
Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and Z, and by-product X. The company uses the net realizable value of its joint products to allocate joint production costs. The by-product is valued for inventory purposes at its market value less its disposal cost, and this value is used to reduce the joint production cost of P2,015,000. Information regarding the company's August 2020 operations are presented below: Y Z 30,000 1,340,000 1,600,000 100,000 760,000 800,000 40,000 240,000 200,000 In liters Finished Goods inventory, August 1 August Sales August Production In Peso Further Processing cost Final Sales value per Liter Sales value per liter at split off Disposal Cost per liter 1,520,000 1,400,000 10 14 2.40 0.40 Required: 1. Calculate the by-product income 2. Calculate the adjusted joint cost for allocation for August 3. Calculate the allocation of joint cost for August for products Y and Z 4. Calculate the unit cost per product and value of closing inventory 5. The company has an opportunity to sell product Z at split off for P10 per liter. Prepare a analysis to show whether Z should be sold at split off point or further processing. 6. Split your joint costs between joint products using physical unit method
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