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A company manufactures 2 joint products P and R in a common process.Data for June are as follows:
Opening inventory- $1000
Direct materials added 10000
Conversion costs. 12000
Closing inventory 3000Production. Sales. Sales price
P. 4000 units. 5000 units. $5 p.u
R. 6000. 5000. $10 p.u
If costs are apportioned between joint products on a sales value basis what was the cost per unit of product R in June?Hi Mr John…I’m not sure how to solve this…I solved like you taught but I took full cost 22000$ ignoring opening and closing inventory..By the way what is inventory here ? Is it product ? I solved like this and my answer isn’t right…Thank you…
Inventory is what was in stock at the beginning (opening inventory) and end (closing inventory) of the period.
So if they started with 1,000 and bought another 10,000 materials, they now have 11,000. If 3,000 are still left at the end, then they must have used 8,000.
So the total cost to split is 8,000 + 12,000 = 20,000.
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