CPA REVIEW SCHOOL OF THE PHILIPPINES MANILA PRACTICAL ACCOUNTING PROBLEMS I! BATCH 76 (GUERRERO/GERMAN/LIM/SIY/FERRER/DELA CRUZ JOINT & BY-PRODUCT COSTING Problem 1. RB Company manufactures Products A and 8 from a joint process that also yields a by-product, X. The net realizable value of the by-product is expected to be significant and the recognition of the incidental output is upon production, Additional information were as follows: A & x Total Units produced 15,000 3,000 6,000 30,000 Joint costs .. 5 330,000 Market value at split-off 362,500 + 187,500 P12,500 _P562,500 etal 9507, ‘Assuming that joint product costs the joint cost allocated to Produc e allocated using the market value at the split-off approach, care F A> 562,500, Je 9307 ‘ FS A 9067 Bd me fused) Be 199, Sasa 917,500 (GIB cc. P110,000 Rem, Je 319,506 D, P108,239 Problem 2 CQ Corporation manufactures liquid chemicals A and 8 from a joint process. Joint costs are allocated on the basis of relative market value at split-off. It costs P68,400 to process 7,500 gallons of Product A and 15,000 gallons of Product B to the split-off point. The market value at split-off is P10 per gallon for Product and P14 for Product(B) Product B requires an additional process beyond split-off at a cost of P2 per gallon before it can be sold. What is GCO's cost to produce 15,000 gallons ofiProduct B? B = aot /aest x iS P72,900 4. oe AGV Company processes raw material into products R1, R2, and R3. Each ton of raw material produces five units of Rd, two units of R2, and three units of R3. Joint processing costs to the split-off point are P105 per ton. Further processing results in the following per unit figures: Ra 2 3 ‘Additional processing costs per unit. P1968 210 P175 Selling price per unit 210 245 245 IF joint costs are allocated by the net realizable value of finished product, what proportion of Joint costs should be allocated tolR1? Final A. 20% RL xs = pee see PA2-76//‘ 2 Problem 4 sleint Products SPV Company produces trarlsgarent soaps, Giyctrin soaps as joint products and liquie|soaps as a by-product. The bottled liquid soaps can be sold for B2 perliter. Liquid soaps require packaging costs of PO,10 per liter and sales commissions at 10% of sales price, The net revenug of the by- product is treated as a reduction from the joint costs. Joint products are assigned joint costs based on the amount liters produced. nat realinable vole 4p a Transparent soaps 320,000 Iters7 4eor Pe G10x2) (2) Glycering soaps hi % (10 Liquid soaps 1,600 liters X1-7 = 2.3.90 130, Joint costs, 80,000 ‘What is the cost assigned to transparent soaps? ‘A. P51,200 ve gor “Wams.tonp = 820)00x77,200. B. P51,412 By fred. hare. (2,20) > 5LS20 j Cc. P51,520 74,280. sal D. P53,332 oe Problem 5 VCX manufactures products B, C and D from a joint process. The total cost in February is P500,000. Other information for the month were as follows: { B c D Ultimate sales value 300,000 550,000 P4S0,000 Processing cost after SO baga,opo 150,000 PB 00 > oT Quantity sold fo00 | “2000 joo” SP Ending Inventory in units 5000 6000 4000 What isthe total production cast of product? ‘A. 300,000 finduct B. 275,000 Je share (Scot xA%G00) = a50T C. P350,000 Pa. {sot D. 400,000 $cc Problem 6 MYB Company produces joint products{A and B)together with by product. A is sold at split off but B and C undergo additional processing, Production data pertaining to these products for year ended December 31, 2013 were as follows: A BG c Total Joint Costs 3,900,000- Separable costs /prc 71,413,750 182,000. 1,595,750 Production in pounds 325,000 487,500 130,000 942,500 Sales price per pound °5. ppt | ace | 1.4287 Ae | There are no beginning or ending inventories. No materials are spoiled in production. Joint costs are allocated to joint products fo achieve the same gross profit ratefor each joint product. Net revenuie from by producti, rom joint production costs of the main product. by pl deducted fi ofthe mainproduct. ue. 8, How much is the share of B in the joint cost? Ae eet ee ee aa nn seats gan fata ~ Wls2io = 2 Soe ae! A. 1,397,500 By duct: : 402,502 4990790 BAST = & 2359500 BAKED 22 Cc. P2,7a1geg Serco M1821) (1497). = 40/1 D. 2,429,440 Je share 3757 PAL fig, = 4Problem 7 JBP Company buys Article RS for P5,60 unit, At the end of processing in Department 1 Article RS split into products J, K and L. Product J is sold at spilt-off point with no further processing, K and L require further processing before they can be sold; K is processed in Department 2; and L is processed in Department 3. The following is @ summary of costs and other related data for the year ended July 31, 2013. epee! Department 2 erence Cost of Article RS Direct Materials 10,080,000 P 105,000 1,020,000 Direct Labor P 1,470,000 4,323,000 P4,860,000 Factory overhead P 1,050,000 2,205,000 5,145,000 Product J Product K Product L Unit sold 750,000 1,125,000 1,687,500 Units on hand at uly 32,2013 375,000 112,500 562,500 sales 3,150,000 10,080,000 14,883,750 JBP uses the estimated net realizable value method to allocate joint cost. The cost of Product{K Sold for the year ended July 31, 2013 The total manufacturing cast of Products) The cost of ending inventory for ProductiLfor the year ended July 31, 2013 Problem 8 The FCD Chemical Company produces a product known as “mentolux" from which by product results, This by-product can be sold at PSO.per pound. The manufacturing costs of the main product and by-product up to the point of separation for the three months ended March 32, 2014 follows: Materials, PB75,000; Labor, P500,000; Overhead, P500,000. = {,2797 /© The units processed were 175,000 pounds of the main product and 17,500 pounds of the by- product. During the period 157,500 pounds of the “mentolux” were sold at P240,, while the Company was able to sell 13,125 pounds of the by-product. Selling and administrative expenses felated to the main product amounted to P2,050,000. Disposal cost per each unit of the by: products P10. ‘Assume that the by-product is inventoried and recorded at net realizable value. What is the unit cost of “mentolux"? Assume that the by-product is recorded as realized. What is the cost of inventory of mentolux? Pos SALE op 90 ue 2357 c Byfied. share _ = Units Prod IST IN TIME/BACKFLUSH COSTING |) Problem 2 ‘The BGC Manufacturing Company uses a Materials and In-Process (MIP) inventory account. At the end of each month, all inventories are counted, their conversion costs components are estimated, and inventory account balances are adjusted accordingly. Raw materials is backflushed from MIP account to Finished Goods account. The following data is for the month of February: Nat —> Fe beginning balance of MIP account 333,625 ammo toctinltfed 2,000 Faw materials purchased FAG-7C// 250000 Conversion cost allocated 46,375)” Ending balance of MIP account 366,625