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- This topic has 7 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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- August 18, 2016 at 3:54 pm #333981
Two product G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress. The following data are available for the last period;
-Total joint cost $384,000
-Further processing cost( Product H) $159,600Product:
G-selling price $0.84
sales units 400,000
prod units 412000H-selling price $1.82
sales units 200,000
prod units 228,000Using the physical unit method for appointing joint production costs, what was the cost value of the closing inventory of product H for the last period?
The answer is $36,400
-Could help me to deal with this “Further processing cost( Product H)” and show the workings to get the answer?
August 19, 2016 at 7:20 am #334029The further processing cost is 159,600 and is for processing 228,000 units. So the extra cost per unit is 159,600/228,000 = $0.70. This is added to the cost per unit calculated for the joint cost, and the inventory of 28,000 units is then value at this total cost.
September 13, 2016 at 6:04 pm #340360Output to finished goods= 5,408 valued at $29,744
Normal loss=276 units
Actual loss=112 unitsAll losses have a scrap value of $2.50 per unit and there was no opening or closing inventory of work in progress.
What was the value of the input during the period?
The answer is $29,532
How to reach the answer?
September 13, 2016 at 7:09 pm #340364You know the cost per unit of good production (29.744 / 5,408)
You know the abnormal gain (276 units – 112 units) and so you can value them.
Then you need to write up a t-account in the same way that I do in my lectures. You have the normal loss, you have the abnormal gain, and you have the output, so the input is the missing figure in the t-account.
September 22, 2016 at 8:49 am #341345I do have followed your instructions but did not get the answer.
Could you please help?
Thanks
September 22, 2016 at 1:17 pm #341381Normal loss = 276 x 2.50 = 690
Abnormal gain = 164 x 5.50 = 902
Output = 29,744Therefore input = 29744 + 690 – 902 = 29532
September 26, 2016 at 2:27 pm #341763Thanks sir
September 26, 2016 at 9:45 pm #341819You are welcome 🙂
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