Question
Principles of Cost Accounting Van Derbeck 16th Edition, chapter 6 problem E6-13 The solution that is given I am not able to make sense of
Principles of Cost Accounting Van Derbeck 16th Edition, chapter 6 problem E6-13 The solution that is given I am not able to make sense of it. I have the first half (part a) of the problem done but need help with the second (part b) half.
R.D. Manufacturing Inc.'s joint cost of producing 1000 units of Product A, 500 units of Product B, and 500 units of Product C is $20,000. The unit sales values of the three products at the split off p9int are Product A-$20, Product B-$200, and Product C-$160. Ending inventories include 100 units of Product A, 200 units of Product B, and 300 units of Product C.
a. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis oftheir relative sales values.
b. Assume that Product C can be sold for $200 a unit if it is processed after split off at a cost of $25 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their adjusted sales values.
a. Relative Sales Basis Products A B C Inventory 1. number of units 1,000 500 500 2. Unit sale price $20 $200 $160 3. Sales value, (1) x (2) $20,000 $100,000 $80,000 4. Percent of sales value 10% 50% 40% 5. Allocation of joint cost of $20,000 $2,000 $10,000 $8,000 6. Allocated joint cost per unit (5) (1) $100 $200 $300 7. Units in ending inventory 200 4,000 4,800 8. Joint costs included in ending inventory valuation (6) x (7) $200 $4,000 $4,800 $9,000
Adjusted Sales Basis Products A B C Inventory 1. Number of units 2. Unit sale price 3. Sales value, (1) x (2) 4. Less costs after split-off 5. Sales value at split-off, (3) - (4) 6. Percent sales value 7. Allocation of joint cost of $20,000 8. Allocated joint cost per unit (7) (1) 9. Units in ending inventory 10. Joint costs included in ending inventory valuation (8) x (9)
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