1. avatar 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.

    • Profile photo of John Moffat 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. avatar 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

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

  3. avatar 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

    • avatar 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
      Please correct me

  4. avatar 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

    • Profile photo of John Moffat 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.

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