# Process Costing: Joint Products (part a)

1. says

Dear Sir,
This costing method can be differ, like if the Joint Products valuation can be determined separately…even than the cost per unit will be calculated on equal part..or its purely management decision.

• says

Your question confused me a little bit.

If we could measure the costs for each product separately, then it would not be ‘joint products’. Joint products is where we cannot identify which bit of the costs relate to which product.
In this case it is up to management to decide how they wish to split the costs between the products – there is no rule.
For the exam, you just need the two methods that I go through in the lecture.

2. says

Hi sir
Could you explain the 20% on the closing inventory in the answer for this question. I do not understand how the 20% came about and it was not mentioned in the question

The question states:
Two products (W and X) are created from a joint process. Both products can be sols immediately after split-off. There are no opening or work in progress. The following information is available for last period:

Total joint production cost \$776 160
Product W
Production Units 12000
Sales 10 000
Selling price per unit \$10

Product X
Prod. units 10 000
Sales 8 000
Selling price per unit \$12

Using the sales value method of apportioning joint production costs, what was the value of the closing inventory of product X for last period

12 000 * 10 = 120 000
10 000 * 12 = 120 000
X= 776 160/2 = 388080
20% of X is closing 388080 * 20% = 77616

• says

The production of X is 10000 units, of which 8,000 are sold. This leaves 2,000 units in inventory, which is 20% of the production. So it is valued at 20% of the cost of production.

• says

Thanks very much for your prompt response.

3. says

Goodday Johnmoffat. I would appreciate u help with this Question

A Co. Operates a Proces that produces two Joints Products-P & Q. Last month Joints Cost of \$35,000 were incurred
and the Organisation apportions these costs to Joints Products using the sales Value Method.

Data relation to last month were are follows

Product P -Production 12000kg; Sales 10000kg; selling Price per kg \$5.00

Product Q -Production 8000kg, Sales 9000kg; selling price per kg \$10.00

How much of the joint cost were apportioned to Product P last month

• says

The sales value of P’s production is 12,000 x \$5 per kg

The sales value of Q’s production is 8000 x \$10 per kg.

You apportion the joint cost on the basis of the sales values of production as above

• says

My Answer as per below :
Joint Cost were apportioned to the Product P is \$12,500.00
based on the question request, using the “Sales Value Method “the working as per below :
Product P = 10,000 kg X\$5.00 = \$ 50,000.00
Product Q = 9,000 kg X \$10.00 = \$ 90,000.00
Total \$140,000.00

so Joint cost for the Product P = 50000/140000 X \$35,000.00 = \$12,500.00

• says

The joint costs are apportioned on the sales value of the units produced (not the units sold).

4. says

lots lots of thanx for the nice lecture & diagram explanation but i have some concept not clear

of joint product &by-product in bbp we have 2 Question it mention b-product sales revenue is credited to the process account here in this question we deduct the the by-product amount from total joint cost

Another question it mentioned the by -product is credited to the sales account there we r not deducting the by-product amount from total joint product amount plz explain me this thanx

• says

this also a by -product of 1000 kg which has a commerciAL value of \$ 600 what commercial value means selling price or wht ?

• says

@admirableprinces, There is no ‘law’ about how to deal with a by-product. Usually we subtract the value of the by-product from the total join costs (which is the same as crediting the process account). However, if the question says to treat the revenue as sales then you do what you are told, and in this case we do not reduce the join cost.

Commercial value is the same as sales value.