INTEGRATION: ADVANCED FINANCIAL ACCOUNTING AND REPORTING

JOINT AND BY-PRODUCT COSTING

PROBLEM 1
MIX Inc. is conducting a joint process which results to three products. The following production data were provided by MIX
Inc. for the current period:

Sales per unit at split off

Product Name Units Produced
point
Ace 10,000 P40
Bat 15,000 P20
Can 25,000 P12

Additional data for the period were provided:

 All the Ace items were sold for a gross profit of P100,000.
 The joint costs were allocated using physical method.

1. What is the gross profit/(loss) if all the Bat items are sold in current year?
2. Assuming the joint costs are fixed, what is the joint cost allocated to Can items using the relative sales
method?

PROBLEM 2
COMBI Inc. manufactures three joint products. The following production data were provided by COMBI Inc. for the current
period:
Additional Processing
Product Name Units Produced Final Selling Price
Costs after Split off
Xen 1,000 P20,000 P50
Yen 2,000 P10,000 P10
Zen 3,000 P30,000 P30

Joint product costs for the current period were as follows:

Raw materials P10,000
Direct Labor P15,000
Factory Overhead P25,000

The company uses the net realizable value method for allocating joint costs.

1. What is the gross profit/(loss) on the sale of all Xen products?

2. What is the total gross profit/(loss) on the sale of all joint products?

PROBLEM 3
CONSO Inc. manufactures joint products ALT and TAB, and a by-product DEL. Cost are assigned to the joint products by
the net realizable value or final market value method which considers further processing costs in subsequent operations. It
is the policy of CONSO Inc. to account for its by-product by market value or reversal cost method or deduction of net
realizable value of by-product from joint manufacturing costs of main products. The total manufacturing costs for 100,000
units were P1,520,000 during the year. Production and costs data follow:
ALT TAB DEL
Units produced 60,000 30,000 10,000
Sales price per unit 70 25 10
Further processing cost per unit 20 5 3
Selling and admin expense per unit 5

1. What is the value of DEL to be deducted from joint manufacturing costs?

2. What is the gross profit of ALT for the year?
3. What is the gross profit of TAB for the year?
INTEGRATION: ADVANCED FINANCIAL ACCOUNTING AND REPORTING
JOINT AND BY-PRODUCT COSTING

PROBLEM 4
MERGE Inc., manufactures ZEN products from a process that yields by a by-product called YAN. The by-product requires
additional processing costs of P30,000. The by-product will require selling and administrative expenses totaling P20,000. It
is MERGE’s accounting policy to charge the joint costs to the main product only. Information concerning a batch produced
during the year ended Dec 31, 2022 follows:
Product Units Market Value at
Units Sold
Name Produced Split off
ZEN 100,000 P50 60,000
YAN 8,000 P10 8,000

The joint costs incurred up to split-off point are:

Direct Materials P2,000,000
Direct Labor P800,000
Factory Overhead P200,000

The selling and administrative expense of MERGE Inc. for the year ended Dec 31, 2022 is P1,000,000 exclusive of that for
the by-product.

1. What is the gross profit for the year if the net revenue from by-product is presented as other income?
2. What is the gross profit for the year if the net revenue from by-product is presented as additional sales
revenue?
3. What is the net income for the year of the net revenue from by-product is presented as deduction from
cost of goods sold?
4. What is the net income for the year if the net revenue from by-product is presented as deduction from
the total manufacturing cost of the main product?

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