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I am doing the practices test of finding the cost of the value of the closing inventory of product X
Total Joint costs $ 384,000
Further processing cost (product H) $ 159,600
Using the Joint cost apportioned to H = 228,000 sales / 640,000 total sales x cost $384000 = $136,800
Total Product cost ($136,800 + 159,600) = $296,400
** Closing inventory values of H = 28,000 / 228,000 X 296,400 = $36,400
My Question is where can i get this **28,000** from
Really appreaciated if can get further helpsI think I’ve solved a similar?— if not the same ?— question from BPP revision kit. As far as I can recall, 28000 is the difference between the production & sales units. Since you’re asked to find out the value of closing inventory, it is imperative that you calculate this difference before apportioning the ADJUSTED production costs.
Sales value of production
W (12,000 units × $10) $120,000
X (10,000 units × $12) $120,000
Joint production costs will be apportioned equally between the two products as the sales
value of production is the same for each product.
Joint production costs allocated to X = $776,160/2 = $388,080
Value of closing inventory =
2,000/10,000 × $388,080 = $77,616
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