Service Department Operating Department

Department A Department B Department X

Department Cost P180,000 P45,000 P130,500
Employee Hrs 6,000 3,000 9,000
Space Occupied per Square feet 5,000 100 3,000

A. Direct Method
1.) How much is the Cost allocated to Department X
2.) How much is the Total Cost of Department Y
B. Step Method
1.) Choosing Department A to be allocated first, How much would be the Cost allocated to Department X
2.)Choosing Department A to be allocated first, how much would be the Cost allocated to Department Y
3.) Choosing Department B to be allocated first, how much would be the Total Cost of Department X
4.)Choosing Department B to be allocated first, how much would be the Total Cost of Department Y
C.Algebriac
5.) How much would be the Total cost of Department X
6.)How much would be the Total cost of Department Y

Problem #1
Departmental Overhead Before Service Provided
Department Allocation Dept Y.
Producing Department A P12,000 40%
Producing Department B P16,000 40%
Service dept Y. P7,260 -
Service dept Z P4,000 20%
Total overhead P39,260 100%

A. Direct Method
1.)How much is the Total Cost of Department A?
2.)How much is the Total Cost of Department B
3.)How much is the Total Cost Allocated to Department B
4.)How much is the Total Cost Allocated to Department A
B. Step Method
B.1 Assuming Department Y would be allocated first
5.) How much is the Total Cost of Department A
6.) How much is the Total Cost of Department B
B.2 Assuming Department Z would be allocated first
7.)How much is the Total Cost of Department A
8.)How much is the Total Cost of Department B
C. Receiprocal Method
9.) How much is the total cost allocated to department A
10.) How much is the total cost allocated to department B

#2 Crawley Company produces joint products A and B from a process that

also yields a by-product. Y. the by-product requires additional processing
before it can be sold. The cost assigned to the by-product is its market value less
additional cost incurred after split-off (NRV-method). Information converning
a batch produced in January at a joint cost of P40,000 is as follows

Product Units Produced Market Value

Cost after split-off (Further Processing)
A 800 P44,000 P4,500
B 700 P32,000 P3,500
C 500 P4,000 P1,000

assuming the by-product was sold at NRV

1.) Using the cost reduction method, how much would be the total Joint Cost after sale of by-product?
2.) Using the income method, how much would be the total Joint Cost after sale of by-product?
3.) in relation to #1 how much would be the total cost allocated to Product A?
4.) in relation to #1 how much would be the total cost allocated to Product B?
5.)In relation to#2 how much would be the total cost allocated to Product A?
6.) In relation to #2 how much would be the total cost allocated to Product B?

Eren Corp, produces 3 types of products , Attack, Armored and Colossal using a common process
Attack Armored Colossal
Units Produced 50,000 40,000 10,000
Sales Value at split-off P420,000 P270,000 P60,000
Further processing cost 88,000 30,000 P12,000
Sales Value after further processing 538,000 320,000 P78,000
Weight Factor 1.5 0.75 1.25

if Joint Cost are P450,000.

1.)Using the Physical method of allocating cost, How much is the cost allocated to each product?
2.)Using the Weighted Average Phyisical method of allocating cost, How much is the Cost allocated to each Product?
3.)Using the Sales Value at Split-off, how much would be the total cost allocated to each product?
4.)Using the Net Realizable Value method, how much would be the total cost allocated to each product?

Problem #4
A lumber company produces two-by-fours and four-by-eights as a joint product and sawdust a by product
the sawdust can be sold for P2 per pound. Packaging cost for the sawdusts are P0.10 per pound and
sales commission of 10% of sales price. The by-product net revenue serves to reduce joint processing cost
for joint products. Joint products are assigned joint cost based on board feet. Data Follows

Joint Cost P50,000

2 by 4 (By Board feet) 200,000
4 by 8(By Board feet) 100,000
Saw dust Produced 1,000

1.) What would be the cost assigned to 2 by 4s?

2.) What would be the cost assigned to 4 by 8s?
3.) What would be the total allocatable joint cost after adjustment?
4
ng Department
Department Y
P344,500
15,000
22,000

ice Provided
Dept Z.
20%
50%
30%
-
100%
her Processing)

d to each Product?
A sawmill processes logs into four grades of lumber totaling 3,000,000 board feet as follows
Board Feet Selling Price at Split-of Weight Factor Further Process Cost
First and Second 450,000 P3 1.2 P2
No.1 common 1,200,000 P2 2 P1
No.2 common 600,000 P1.21 0.5 P5
No.3 common 750,000 P0.7 0.6 P4
3,000,000
Total Joint Cost P186,000

1.) Allocate the Joint Cost using the Physical Unit method
2.)Allocate the Joint Cost using the Sales Value at Split off Method
3.)Allocate the Joint Cost Using the Weighted Average Phyiscal unit method
4.) Allocate the Joint Cost Using the Weighted Average Selling Price at Split off Method
5.)Allocate the Joint Cost using the Selling Price after Further Processing Method/NRV method

A peach-canning factory purchases P5,000 of peaches; grades them into Fancy, Choice, Standard and Pie
Quality; and then cans each grade. The following data on grade, number of cases and weight factor follows:

Number of Cases Selling Price at Split-of Weight Factor Further Process Cost
Fancy 100 10 1.3 5
Choice 120 12 1.1 6
Standard 303 15 1 7.5
Pie 70 18 0.5 9
Total 593

1.) Allocate the Joint Cost using the Physical Unit method
2.)Allocate the Joint Cost using the Sales Value at Split off Method
3.)Allocate the Joint Cost Using the Weighted Average Phyiscal unit method
4.) Allocate the Joint Cost Using the Weighted Average Selling Price at Split off Method
5.)Allocate the Joint Cost using the Selling Price after Further Processing Method/NRV method

Gross Margin Method

A company manufactures 2 products, Alpha and Beta, from a joint process. Each production run costs P5750
and results in 1,000 galllons of Alpha and 3,000 gallons of Beta. Neither product is salable at split-off, but
must be further processed suchthat the separable cost for Alpha is P1 and P2 for Beta

1.) Calculate the Theoritical Revenue/Total Revenue, Total Cost and Total Gross profit the company will earn
if all of Alpha and Beta would be sold
2.) Allocate the Joint Cost using the Gross Profit Margin Method

By Product

Cost
Direct Materials P15,000
Direct Labor P6,500
Applied Overhead P4,550
Total Manufacturing Cost 26,050

From Each Production run, Edward company obtains 1,600 of Product A, 500 units of Product B, and 30 pounds of By-Product.
The By product can be sold for P5 each

Income Method
Cost Reduction Method
Selling Price After Further Processing
P6
P4
P8
P10

Selling Price After Further Processing

20
24
21
30
0 pounds of By-Product.