Comments

  1. avatar says

    So doing it the Mark it value basis the total cost per kilo is more than on the physical unit basis and the profit per kilo is much less? Please could you explain this for my understanding? Thank you

    • Profile photo of John Moffat says

      The total joint cost of 9,000 remains the same however it is spilt between the products.

      What changes is the cost per unit for each product – one is higher and one is lower if we use the market value basis (and I explain the reason why a company might choose to use the market value basis in the lecture).

      Adding the two unit costs together is meaningless – they are two different products and they make different quantities of them. It is like saying that a banana costs 10c and an apple costs 5c, so one of each costs 15c. That is completely irrelevant and means nothing (and is not why we are doing the exercise).

  2. avatar says

    Hi Sir,

    I made an error when i written the first question this is the corrected one sorry.I will like you to help me out with the answer for this question on Joint and By-product please I am having some complications. Thank you.

    PR Ltd manufactures two joint products,P&R in a common process. Data for June are as follows.

    Opening Inventory $1000
    Direct Materials $ 10,000
    Conversion Cost $12,000
    Closing Inventory $3,000

    P
    Production Units – 4000

    Sales Units – 5000

    Sales Price $ per unit – $5

    R
    Production units – 6000

    Sales units – 5000

    Sales price $ per unit – $10

    If cost are apportioned between joint products on a sales value basis, what was the cost per unit of product R in June?

  3. avatar says

    Sir I didnt really get the bottle part? What would be the question y this final bottling thing so much matters?

    Plus wouldnt 1.9 be then the cost price if it worths 1.9 wen toilet water comes out the container?

  4. avatar says

    in the last example..the professor adds the further cost back to the step where we r finding cost p.u
    why do we add it back if we have already deducted it in an earlier step?
    because i tried to solve the question myself as well..and in the answer..at the end of the book..they havent added the further cost in to the cost p.u

    i just wanna be sure..if i should add it if i get an question relationg to cost p.u or not

    • Profile photo of John Moffat says

      It was subtracted in order to get a figure for the realisable value at the point it left the joint process – this was simply for the purpose of splitting the joint costs.
      As a result, the figures of $3.16 and $2.02 in the answer in the course notes are the costs per kg at the point at which the two products leave the joint process.
      However since further work is needed after they leave the joint process, to get the final cost of the completely finished products you then need to add on the cost of the further work.
      It depends what the question asks for – the costs when the products leave the joint process, or the final cost when they are fully finished.

  5. avatar says

    the lectures are really helpfull, but the voic of the teacher is so irritating that I can’t bear it any more. A specially when he talks 10 minuts about some not important things. Agrr… sorry for the comment but I had to expres my irritation

    • Profile photo of John Moffat says

      @debbie2872, It is not 3.60 for both products. It is 3.6 for product A and 3.30 for product B.

      In both cases it is the final selling price less the cost of further work done after they leave the joint process.

      The net realisable value is used as though it was the value when they left the joint process.

      (Check with the answers at the end of the Course Notes)

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