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In a process where there are no work–in–progress inventories, two joint products (J and K) are created. Information (in units) relating to last month is as follows:
Product Sales Open. Finished Goods Clos. Finished Goods
J 6,000 100 300
K 4,000 400 200Joint production costs last month were $110,000 and these were apportioned to joint products based on thenumber of units produced. What were the joint production costs apportioned to product J for last month?
answer:
J: (6000- 100 +300) = 6200
K: (4000-400+200)= 3800
which gives us 10,000Joint costs apportioned to J: 6200/10000X 110,000$ = 68,200
only what I didn’t get is why they deduct from sales – Opening and adding closing inventory. I did the opposite (Sales+opening-closing). I want to understand the concept of doing this calculation.
Thanks in advance
The number sold is equal to the opening inventory plus the number produced less the closing inventory.
Here we know how many were sold, and so to get the number produced we take the sales and subtract the opening inventory and add the closing inventory.
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