A B C D E F G

1 Queston3
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3 a)Physical Method
Joint Cost Joint Product Production unit Relative Allocation of
4 Joint Cost
Split-off-point proportion
5 $ 7,750,000 Goldex 300,000 0.545 $ 4,227,273
6 Holdex 250,000 0.455 $ 3,522,727
7 Total joint cost allocated $ 7,750,000
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9 Goldex Holdex
10 Closing Inventory (unit) 80,000 70,000
11 Joint cost/unit (W1) $ 14.09 $ 14.09
12 Cost of ending inventory $ 1,127,272.73 $ 986,363.64
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14 Working:
15 W1) $4,227,273 / 300,000units = $ 14.09 ; $3,522,727/ 250,000units = $14.09
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34 b)Net Realisable Value Method
Joint Cost Joint Products Sale Value of Seperable cost of NRV Relative Allocation of
35 Final Product processing proportion joint cost

36 $ 7,750,000.00 Goldex $ 15,000,000 $ 3,000,000 $ 12,000,000 0.60 $ 4,650,000.00

37 Holdex $ 9,500,000 $ 1,500,000 $ 8,000,000 0.40 $ 3,100,000.00
38 Total joint cost allocated $ 7,750,000.00
39
40 *Working of Sale Value of Final Product of :
41 Goldex, $50 x 300,000
42 Holdex, $38 x 250,000
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44 Goldex Holdex
45 Closing Inventory (unit) 80,000 70,000
46 X Joint cost/unit (w1) $ 15.50 $ 12.40
47 Cost of ending inventory $ 1,240,000.00 $ 868,000.00
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49 Workings:
50 W1 ) $ 4,650,000/ 300,000 unit = $15.50 ; $3,100,000 / 250,000units = $12.40
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65 c)Constant Gross Margin Method
66 Goldex Holdex Total
67 Sale value $ 15,000,000.00 $ 9,500,000.00 $ 24,500,000.00
68 Joint cost $ 4,500,000.00 $ 3,250,000.00 $ 7,750,000.00
69 Additional
processing cost $ 3,000,000.00 $ 1,500,000.00 $ 4,500,000.00
70 Gross Margin $ 7,500,000.00 $ 4,750,000.00 $ 12,250,000.00
71 Gross Margin (w1)
Percentage 50.00% 50.00% 50.00%
72 * Gross Margin = Sale Value X Gross Margin Percentage
73 *Joint Cost = Sale value - Additional processing cost - Gross Margin
74
75 Goldex Holdex
76 Closing Inventory (unit) 80,000 70,000
77 Joint cost/unit (W2) $ 15.00 $ 13.00
78 Cost of ending inventory $ 1,200,000.00 $ 910,000.00
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80 Working:
81 W1) ($12,250,000 / $24,500,000 ) X 100% = 50.00%
82 W2) $4,500,000/ 300,000units = $15.00 ; $3,250,000 / 250,000units = $13.00
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93 d)
94 For product Moldex
95 Incremental Revenue (W1) $ 12.00
96 Less: Incremental Cost $ (14.00)
97 Incremental Loss $ 2.00
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99 Working:
100 W1) $62-$ 50=$12
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102 Therefore, the company should not produce Moldex, because there is a incremental loss of $ 2.