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Two product G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress. The following data are available for the last period;
-Total joint cost $384,000
-Further processing cost( Product H) $159,600Product:
G-selling price $0.84
sales units 400,000
prod units 412000H-selling price $1.82
sales units 200,000
prod units 228,000Using the physical unit method for appointing joint production costs, what was the cost value of the closing inventory of product H for the last period?
The answer is $36,400
-Could help me to deal with this “Further processing cost( Product H)” and show the workings to get the answer?
The further processing cost is 159,600 and is for processing 228,000 units. So the extra cost per unit is 159,600/228,000 = $0.70. This is added to the cost per unit calculated for the joint cost, and the inventory of 28,000 units is then value at this total cost.
Output to finished goods= 5,408 valued at $29,744
Normal loss=276 units
Actual loss=112 unitsAll losses have a scrap value of $2.50 per unit and there was no opening or closing inventory of work in progress.
What was the value of the input during the period?
The answer is $29,532
How to reach the answer?
You know the cost per unit of good production (29.744 / 5,408)
You know the abnormal gain (276 units – 112 units) and so you can value them.
Then you need to write up a t-account in the same way that I do in my lectures. You have the normal loss, you have the abnormal gain, and you have the output, so the input is the missing figure in the t-account.
I do have followed your instructions but did not get the answer.
Could you please help?
Thanks
Normal loss = 276 x 2.50 = 690
Abnormal gain = 164 x 5.50 = 902
Output = 29,744Therefore input = 29744 + 690 – 902 = 29532
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