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Example no1.:1 Joint Production Cost 120,0002 Quantities produced:A 20,000B 15,000C 10,000D 15,000 60,0003 Sale price at Split off point:A 0.25B 3.00C 3.50D 5.00Solution:
MARKET OR SALE VALUE METHOD (AT SPLIT OFF POINT)
Prod
 
uct Qty Sale Market RatioPrice ValueA 20,000 0.25 5,000 0.03125B 15,000 3.00 45,000 0.28125C 10,000 3.50 35,000 0.21875D 15,000 5.00 75,000 0.46875160,000 1.00Particulars A BTotal units produced 20,000 15,000Sold units 18,000 12,000Ending units 2,000 3,000Sale Price per unit 0.25 3.00Cost price per unit 0.1875 2.2500Gross profit per unit 0.0625 0.7500Amount of gross profit 1,125 9,000Gross profit percentage 25 25
 ALLOCATION OF JPC BY MARKET VALUE METHOD (AFTER SPLIT OFF POINT)
Product Further UltimateCost M.VA 2,000 0.50B 10,000 5.00C 10,000 4.50
 
D 28,000 8.00Product Qty Ultimate Ultimate FurtherM.V per unit M.V CostA 20,000 0.50 10,000 2,000B 15,000 5.00 75,000 10,000C 10,000 4.50 45,000 10,000D 15,000 8.00 120,000 28,000Particulars A BTotal units produced 20,000 15,000Sold units 18,000 12,000Ending units 2,000 3,000Sale Price per unit 0.50 5.00Joint production Cost 4,800 39,000Further cost 2,000 10,000Total Cost 6,800 49,000Cost price per unit 0.3400 3.2667Gross profit per unit 0.1600 1.7333Amount of gross profit 2,880 20,800Gross profit percentage 32.00 35
QUANTITATIVE UNIT METHOD:
Product QTY Distribution of Revised Qty Ratio AllocationWaste to Good of JPCoutputCoke 1,320.00 69.4737 1,389.4737 0.6947 13.895Coal Tar 120.00 6.3158 126.3158 0.0632 1.263Benzol 21.90 1.1526 23.0526 0.0115 0.231Sulfate 26.00 1.3684 27.3684 0.0137 0.274Gas 412.10 21.6895 433.7895 0.2169 4.338Waste / Water 100.00 - -2,000.00 100.00 2,000.00 1.00 20.00lbs
 
Note: 100 / 1900 = 0.05263divided by 1900 instead of 2000 because on distribuitonof 100 on 1900 good output
 AVERAGE OF UNIT COST METHOD:
Consider Example 1:
Calculate average rate:
Average rate = Joint Production cost / Total nos. of unit producedAverage rate = $ 120,000 / 60,000 unitsA
 
verage rate = $ 2 per unitProduct Qty Average cost Allocationrate of JPCA 20,000 2 40,000B 15,000 2 30,000C 10,000 2 20,000D 15,000 2 30,00060,000 120,000
Weighted Average Method:
Product Qty Point/ Weight Total Rate AllocationWeight / Point of JPCA 20,000 3 60,000 0.20 12,000B 15,000 12 180,000 0.20 36,000C 10,000 13.50 135,000 0.20 27,000D 15,000 15 225,000 0.20 45,000600,000 120,000Weighted Average Rate = Amount of Joint Production cost / Total WeightWeighted Average rate = $ 120,000 / 600,000 unit weightWeighted Average rate = $0.20 per unit
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