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JOINT AND BY3PRODUCT Maroon Ltd is a company that produces...

JOINT AND BY3PRODUCT

Maroon Ltd is a company that produces chemicals for the cleaning industry. One of its processes manufactures join products Y and
Z, and by-product X. The company uses the net realizable value of its joint products to allocate joint production costs. The by-product
is valued for inventory purposes at its market value less its disposal cost, and this value is used to reduce the joint production cost of
P2,015,000. Information regarding the company's August 2020 operations are presented below:

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JOINT AND BY+PRODUCT Maroon Ltd is a company that produces

chemicals for the cleaning industry. One of its processes manufactures join
products Y and Z, and by-product X. The company uses th... Show more

Required:
1) Calculate the by-product income
2) Calculate the adjusted joint cost for allocation for August
3) Calculate the allocation of joint cost for August for products Y and Z
4) Calculate the unit cost per product and value of closing inventory
5) The company has an opportunity to sell product Z at split oS for P10 per liter. Prepare analysis to show whether Z should be sold
at split oS point or further processing.
6) Split your joint costs between join products using physical unit method.

Accounting Business Cost Accounting 섈 쉋

Answer & Explanation 싙 Helpful

Solved by veri9ed expert 숨

1. 480,000

2. 1,53,5,000

3. Y: 923,023.06 Z: 611,976.94

4. Unit price per unit: Y= 1.45; Z= 2.66 Closing inventory: Y : 21,047.93; Z : 373,095.96

5. See presentation below

 6. Y = 1,023,333.33 Z= 511,666.67

Step-by-step explanation

1. By-product income

By-product income is equal to market value (price per liter X quantity sold in liters) less disposal cost (disposal cost per liter X quantity sold in liters).

2 Adjusted joint cost.

The problem states that by product income is used to reduced the joint cost. Thus, to get the adjuste joint cost, we will deduct the by product income
from the joint cost amounting to Php2,015,000.
Joint product cost - Byproduct income = adjusted Joint costs
Php2,015,000. - 480,000 = 1,535,000

3 Allocation of joint cost

Allocation of joint cost will be done using the Net realizable value (NRV) method (based on problem stetement). NRV is equal to bnal sales value less any
further processing cost. Computation steps are as follows:

4 Unit costs per product and value of closing inventory

Unit cost per product is equal to Allocated joint cost + further processing cost divided by total production in liter
 섘

4 analysis for opprtunity to sell at split oX or sell after further processing

5 Split your joint costs between join products using physical unit method. The split will be based on the production units of each product

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