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Assignmet Question 3:

a. Deternine the cost of the ending inv

Production
Total joint processing costs
Joint processing costs per unit
Closing inventories
Cost Allocated to a Joint Product
Cost of closing inventory

b. Determine the

Sales(units)
Selling price per unit
Final sales value
Additional processing costs

Estimated Net Realisable Value

Total joint processing costs

Allocated Joint costs

Separable cost

Inventories costs

Joint processing cost per unit


Closing inventories
Cost of ending inventories

c. Determine the cost of the ending inventorie


Product
Chocolate
Double-Coffee
Total expected final sales value
Deduct:

Joint costs

Additional processing costs


Gross profit
Gross margin

Product
Chocolate
Double-Coffee
Total

Chocolate
Double-Coffee

Double-Coffee
Additional cost

New selling price


New gross profit

Double-Coffee
Current selling price
Current gross profit
Assignmet Question 3:
a. Deternine the cost of the ending inventories of each of the products as at 1 Oct
Chocolate
$ 1,500,000.00
$ 15,500,000.
15500000/ 27500000=0.56
$ 400,000.00
15500000*1500000/2750000=8454545.45
400000*0.56=224000

b. Determine the cost of the ending inventories of each of the


Chocolate
$ 1,100,000.00
$ 100.00
1100000*100=110000000
$ 6,000,000.00

110000000-6000000=104000000

$ 15,500,000.

15500000*(104000000/SUM(104000000,65400000))=9575938.55

0.56*1500000=840000

SUM(9575938.55,840000)=10415938.55

10415938.55/1100000=9.47
$ 400,000.00
400000*9.47=3788000

c. Determine the cost of the ending inventories of each of the products as at 1 October 20
Expected final sales value
$ 110,000,000.00
$ 68,400,000.00
110000000+68400000=178400000

$ 15,500,000.00

100+76=176
178400000-15500000-176=162899824
162899824/178400000*100= =91%

Sales Value
$ 110,000,000.00
$ 68,400,000.00
110000000+68400000=178400000

Cost per unit


107660000/1500000=71.77
66450000/1250000=53.16

D. Should the company p


Cost per unit using
Physical method
$ 1,100,000.00
$ 28.00
1100000+28=1100028
$ 124.00
124-1100028=(1099904)

Physical method
$ 1,100,000.00
$ 76.00
76-1100000=(1099924)
of the ending inventories of each of the products as at 1 October 2016 using the physical method
Double-Coffee
$ 1,250,000.00
15,500,000.00
000/ 27500000=0.56
$ 350,000.00
15500000*1250000/2750000=7045454.55
350000*0.56=196000

b. Determine the cost of the ending inventories of each of the products as at 1 October 2016 using the net realisable value
Double-Coffee
$ 900,000.00
$ 76.00
900000*76=68400000
$ 3,000,000.00

68400000-3000000=65400000

15,500,000.00

15500000*(65400000/SUM(104000000,65400000))=5984061.39

0.56*1250000=700000

SUM(5984061.39,700000)=6684061.39

10415938.55/900000=11.57
$ 350,000.00
11.57*350000=4049500

ending inventories of each of the products as at 1 October 2016 using the Constant gross margin method
Gross Margin
110000000*91%=100100000
68400000*91%=62244000
100100000+62244000=162344000

Closing inventories
$ 400,000.00
$ 350,000.00

D. Should the company produce “Triple-Strong Coffee”?


Cost per unit using
Net realisable value method
$ 3,788,000.00
$ 28.00
3788000+28=3788028
$ 124.00
124-3788028=(3788028)

Net realisable value method


$ 3,788,000.00
$ 76.00
76-3788000=(3787924)
t 1 October 2016 using the physical method
Total
1500000+1250000=27500000

h of the products as at 1 October 2016 using the net realisable value method

ober 2016 using the Constant gross margin method

Production
Sales(units)
Closing inventories
Selling price per unit

Additional processing costs

Cost of goods sold


110000000-1500000=108500000
68400000-1250000=67150000
108500000+67150000=175650000

Cost of the ending inventories


71.77*400000=28708000
53.16*350000=18606000

mpany produce “Triple-Strong Coffee”?

Constant gross margin method


$ 110,000,000.00
$ 28.00
110000+28=110000028
$ 124.00
124-110000028=(109999904)

Constant gross margin method


$ 110,000,000.00
$ 76.00
76-110000000=(109999924)
ealisable value method

$ 1,500,000.00
$ 1,100,000.00
$ 400,000.00
$ 100.00

$ 100.00

Separable costs
$ 840,000.00
$ 700,000.00
840000+700000=1540000
$ 1,250,000.00
$ 900,000.00
$ 350,000.00
$ 76.00

$ 76.00

Joint costs allocated


108500000-840000=107660000
67150000-700000=66450000
107660000+66450000=174110000