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A company manufactures two main products, J and K, and the by-product L. The by-product has a net realisable value of $2 per litre. The following information relates to last month, when there were no opening inventories.
Product
J
K
L
Litres
Litres
Litres
Production
50,000
40,000
10,000
Sales
45,000
30,000
10,000
Joint costs last month were $290,000. Company policy is to apportion joint costs on a physical measure basis and to treat the net realisable value of the by-product as a deduction from the cost of the main products.
What was the cost value of last month’s closing inventory of product J?
$15,000
$13,500
$16,200
$16,400In future, please ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
Have you watched the free lectures? Because you should not really be attempting our mock exam until you have watched them all.
You subtract the net realisable value of the by-product from the joint costs. This gives 290,000 – (10,000 x 2) = 270,000.
You then get a cost per litre for the joint products by dividing the 270,000 by the production of the main products – 270,000/90,000 = $3 per litres.
Now you can calculate the closing inventory of J, and value it at $3 per litre.
Two investments are available.
Investment P offers interest of 5% per year compounded half-yearly for a period of 4 years.
Investment Q offers one interest payment of 18% at the end of its 4 year life.What is the annual effective interest rate offered by each of the two investments?
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