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.
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A company manufactures two joint products, P and R, in a common process. Data for June are as follows
Opening inventory 1,000
Direct materials added 10,000
Conversion costs 12,000
Closing inventory 3,000Production Sales Sales price
Units Units $ per unit
P 4,000 5,000 5
R 6,000 5,000 10If costs are apportioned between joint products on a sales value basis, what was the cost per unit of product R in June?
1000 + 10000 + 12000 – 3000= 20000
on a sales value basis
P 4000 units* $5=20000
R 6000 units *$10= 60000
Total= 20000+60000=80000R= (60000/80000) * 20000 = $15000
cost per unit of R= $15000/6000 units = $2.5alighere: the answer from yaaseen is correct
yaaseen: thank you for answering, but please do not answer in this forum because it is Ask the Tutor (and you are not the tutor 🙂 ). Please restrict yourself to answering in the general F2 forum.
Hello tutor,
I have a question: why the sales value basis is calculating by multiplying sales price per unit with production units, instead of sales units?
Thank you!
Because the costs are the costs of what is produced, whether or not the production is all sold or remains in inventory.
Because the costs are the costs of what is produced, whether or not the production is all sold or remains in inventory.
Oh I see. I just got a bit confused with the wording. Now everything is clear.
Thanks a lot for your help. Much appreciated!
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