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# PROBLEM 1

Gordon Company produces three products: A, B, and C from the same process. Joint costs for this
production run are \$2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound
A 800 \$6.50 \$3.00 \$2.00 \$ 7.50
B 1,100 8.25 4.20 3.00 10.00
C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Gordon Company will incur the following disposal costs upon sale:
A, \$3.00; B, \$2.00; and C, \$1.00.

## Compute the joint processing cost to be allocated to each product using:

a. Physical measure allocation
b. Monetary measure allocation
 Sales value at split-of
 NRV at split-off
 Approximated NRV at split-off

PROBLEM 2

From joint manufacturing processes, Kobe Corp. makes three products L, M and N. Each product may be
sold at split off or processed further. Additional processing requires no special facilities, and separable
costs of further processing are entirely variable and traceable to the products involved.

For the period just ended, all three products were processed beyond split-off. Joint production costs for
the year were P1,200,000. Sales value and cost were reported as follows:

L M N
Units produced 6,000 4,000 2,000
Sales value at split-off P500,000 P820,000 P480,000
Sales value and costs if
processed further:
Final sales volume P840,000 P900,000 P640,000
Separable costs P180,000 P140,000 P160,000

In order not to realize any loss, Kobe should not subject which products to additional processing?

PROBLEM 3
Whalen Company manufactures products X and Y from a joint process that also yields a by-product, Z.
Revenue from sales of Z is treated as a reduction of joint costs. Additional information is as follows:
Products
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? \$262,000
Sales value at
split-off \$300,000 \$150,000 \$10,000 \$460,000

Joint costs were allocated using the sales value at split-off approach.