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Juizer Pulper
Production (units) 250,000 150,000.00
Sales(units) 170,000 85,000.00
Closing inventories (units) 80,000 65,000.00
$
Selling price per unit $35 28.00
$
Additional processing costs $1,150,000 980,000.00
Total costs
Joint processing costs 4,500,000
Additional
Lirewire could be processed further into Fertilyzer
Additional Cost ( per unit) $8.00
Price of Fertilyzer $37.00
A.The cost of ending inventories of each of the products using the physical
method
Juizer
Physical quantity 250,000.00
Proposionate share of quantity 62.50%
Cost of goods produced
$
Joint cost allocation $2,812,500.00 1,68
$ $
Additional processing costs 1,150,000.00 980,
$ $
Cost of goods produced 3,962,500.00 2,66
$ $
Cost of goods produced per unit 15.85 17.7
$ $
Cost of ending inventory 1,268,000.00 1,15
B. The cost of ending inventories of each ò the production using the net relisable value method
Juizer
Sales value 8,750,000.00
Less: additional processing costs 1,150,000.00
Estimated NRV at split-off point 7,600,000.00
Proportional share of NRV
7,600,000/10,820,000 70.24%
3,220,000/10,820,000
$ $
Allocated joint costs 3,160,813.31 1,33
$ $
Allocated joint costs per unit 12.64 8.93
$ $
Additional Processing cost per unit 4.60 6.53
$ $
Total cost per unit 17.24 15.4
$ $
Ending Inventory units 80,000.00 65,0
$ $
Costs of Ending inventory 1,379,460.26 1,00
C.The cost of ending inventories of each of the products using the constant gross margin method.
Juizer
Quantity produced (unit) 250,000.00
$ $
Selling price per unit 35.00 28.0
$ $
Sales 8,750,000.00 4,20
Less cost
$ $
Allocated joint process cost 3,329,730 1,17
$ $
Additional processing costs 1,150,000.00 980,
$ $
Total cost 4,479,730 2,15
$ $
Gross margin 4,270,270 2,04
Percentage of Gross margin 48.80309%
Cost of Ending Inventories as at 31 Jan 2011
Juizer
$ $
Total cost 4,479,730 2,15
$ $
Ending Inventories 1,433,514 931,
Products
Fertilyzer
Sales value after further processing 5,550,000.00
Sales value at split-off point 4,200,000.00
Incremental revenue 1,350,000.00
Costs of further processing 1,200,000.00
Profit from further processing 150,000.00
The company should produce Fertilyzer, because the company can get the profit of 150,000.