1. avatar says

    Hello Sir,
    I have a question on page 74 question 4, when we calculate the production in one period should be less opening stock and plus closing stock, right? I am confused in this question solution, why you calculate the joint cost, pulsing open stock $40000 and lessing closing stock $2000??
    Thank you very much for your explanation in advance.

    • Avatar of John Moffat says

      When P and Q left the process, the cost per unit for both of them is the joint cost (350,000) divided by the total production (750,000 units). This gives a cost per unit of 0.46666.

      Q the has further work done (to turn it into X) at a cost of $66,000 for production of 330,000 units, which means there is an extra cost of 66000/330000 = 0.2 per unit.

      So…the total cost per unit for X is 0.46666 + 0.2 = 0.66666

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