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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

## 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

Gross profit
Gross margin

Product
Chocolate
Double-Coffee
Total

Chocolate
Double-Coffee

Double-Coffee

## 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

## 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

## 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