Joint and By-Product costing

Magwanji Chemicals produces four products from a joint process costing TZS 150,000 per month. After leaving the joint process, the products must be further refined before they are salable. You have been provided with the following information:

Product | Volume | Further processing costs (TZS) |
Selling price per unit (TZS) |
---|---|---|---|

A-1 | 15,000 | 350,000 | 80 |

B-3 | 25,000 | 400,000 | 40 |

C-2 | 10,000 | 100,000 | 22 |

Q-9 | 50,000 | 250,000 | 10 |

Required:

- Allocate the joint cost using physical measure method.
- Allocate the joint costs using the net realizable value method.

- Updated: 18 Jul 20
- |
- Attempts: 634
- |
- Correct: 287

Bishop Corporation produces three products at a joint manufacturing cost of TZS 1,250,000. The following information has been provided:

Product | Volume | Further processing costs (TZS) |
Selling price per unit (TZS) |
---|---|---|---|

A | 25,000 | 750,000 | 40 |

B | 40,000 | 750,000 | 50 |

C | 35,000 | 210,000 | 20 |

**Required:**

Allocate the joint cost using constant gross margin percentage method.

- Updated: 18 Jul 20
- |
- Attempts: 199
- |
- Correct: 69

Michele Derick White is a manufacturer of cemetery headstones and architectural granite slabs. Granite City excavates blocks of granite from its quarry from its joint processes of Quarry and Cutting. Two joint products (cemetery monuments and architectural granite) are produced along with a by-product called grit.

Cemetery monuments are cut, polished, and engraved in a variety of standard shapes, sizes, and patterns and sold to funeral homes.
Architectural granite slabs are special-ordered by contractors for office buildings.
These slabs are cut and polished to exacting specifications.
The small pieces of granite resulting from the cutting process are crushed and sold to farm-supply outlets as poultry grit.

Granite City has provided the following costs and output information:

Process cost (TZS) | Kgs of output | |
---|---|---|

Quarry | 350,000 | 100,000 |

Cutting | 250,000 | 90,000 |

Monuments | 300,000 | 40,000 |

Granite slabs | 450,000 | 60,000 |

Grit | 10,000 | 5,000 |

Quarry and Cutting are joint processes. A local farm-supply distributor purchases all of the grit that is produced at TZS 40 per kg. Assume that Granite City uses the physical units method to allocate joint costs.

Required:

- What would be the cost per kg of monuments and granite slabs, assuming that the grit is accounted for as “Other Income”?
- What would be the cost per kg of monuments and granite slabs, assuming that the grit is accounted for as by-product revenue deducted from the main product cost?

- Updated: 18 Jul 20
- |
- Attempts: 394
- |
- Correct: 130

Quorum, Inc., has joint processing costs of TZS 1,000,000. There are no further processing costs. The demand for Quorum’s products has been fluctuating greatly; production has remained relatively constant. The following information for the past year has been provided:

Product | Units sold |
Selling price per unit (TZS) |
Units produced |
---|---|---|---|

A | 25,000 | 4 | 30,000 |

B | 40,000 | 5 | 30,000 |

C | 50,000 | 2 | 50,000 |

Required:

Allocate the joint costs using the sales value method.

- Updated: 18 Jul 20
- |
- Attempts: 234
- |
- Correct: 80

Taldot Company produces three products (X, Y, and Z) in a joint process costing TZS 100,000. The products can be sold as they leave the process, or they can be processed further and sold. The cost accountant has provided you with the following information:

Product | Unit Volume |
Selling price at Split-Off (TZS) |
Separable costs (TZS) |
Selling price after further processing (TZS) |
---|---|---|---|---|

X | 3,000 | 10 | 60,000 | 25 |

Y | 4,000 | 15 | 50,000 | 30 |

Z | 8,000 | 20 | 90,000 | 35 |

Assume that all processing costs are variable costs.

Required:

Which products should Taldot sell at split-off, and which products should be processed further?

- Updated: 18 Jul 20
- |
- Attempts: 71
- |
- Correct: 34

The Temper-Tone Steel Company produces two major products, a stainless steel sheet called Flextin and stainless steel called silverware. Both products go through the same initial production process where the costs are inseparable. The total cost of this process last period was TZS 550,000. The silverware goes through a second process for completion and the cost of this process is TZS 10,000. The resulting volume: is 500,000 pieces of silverware and 45,000 sheets of Flextin. The market value of the Flextin is TZS 2,250,000 while the market value of the silverware is TZS 260,000.

Determine the total cost of each product using the Net Realizable Value Method.

- Updated: 18 Jul 20
- |
- Attempts: 106
- |
- Correct: 26

In February, the Berna Company spent TZS 50,000,000 in production costs for three Joint Products, G, H, and I and a By-Product Z up to the Split-Off Point. There were 10,000 gallons of G produced, 15,000 gallons of H, 25,000 gallons of I, and 500 gallons of Z. G sells for TZS 2,500 per gallon, H for TZS 2,666.72 per gallon, I for TZS 1,400 per gallon, and Z for TZS 700 per gallon. The company incurs selling costs of TZS 150 per gallon of Z sold. The company had no beginning or ending inventories in February.

Required:

- Allocate the production costs using the Sales Value At Split-Off Method.
- Find the gross margin by treating the net revenues of the By-Product as a reduction of Cost of Goods Sold.
- Find the Gross Margin by treating the net revenues of the By-Product as Other Income.

- Updated: 18 Jul 20
- |
- Attempts: 145
- |
- Correct: 47

Two products W and X are created from a joint process. Both products can be sold immediately after split-off. There are no opening inventories or work-in-progress. The total joint production costs are T.shs 7,761,600 The following information is available for the last period:

Product | Production units | Sales units | Selling Price per unit |
---|---|---|---|

W | 12,000 | 10,000 | T.shs 100 |

X | 10,000 | 8,000 | T.shs 120 |

Using the sales value method of apportioning joint production costs, calculate the value of the closing inventory of products X and Y for the last period.

- Updated: 18 Jul 20
- |
- Attempts: 93
- |
- Correct: 42

ALPHA Chemical Company manufactures two industrial products in a joint process. In May, 10,000 gallons of input costing TZS 600,000 were processed at a cost of TZS 1,500,000. The joint process resulted in 8,000 kgs of Resoline and 2,000 kgs of Krypto. Resoline sells for TZS 250 per kilogram and Krypto sells for TZS 500 per kilogram. Management generally processes each of these chemical further in separable process to produce more refined chemical products. Resoline is processed separately at a cost of TZS 50 per kilogram. The resulting product, Resolite, sells for TZS 350 per kilogram. Krypto is processed separately at a cost of TZS 150 per kilogram. The resulting product, Kryptite, sells for TZS 950 per kilogram.

Required:

- Allocate the company’s joint production costs for May using:
- The physical units method
- The relative sales value at spilt – off method
- The Net Realizable value method
- ALFA’s management is considering an opportunity to process Kryptite further into new product called Omega. The separable processing will cost TZS 400 per kilogram. Perking costs for Omega are projected to be TZS 60 per kilogram, and the anticipated selling price is TZS 1,300 per kilogram. Should Kryptite be processed further into Omega? Why?

- Updated: 18 Jul 20
- |
- Attempts: 49
- |
- Correct: 10

SAKAMA Tz produced 3,660 units, consisting of three separate products, in a joint process for the year. The market for these products was so unstable that it was not practical to estimate the selling price of the products. A cost of T.shs 425,000 was incurred in the joint process. Product X's production was 80% of product Y's while product Z's production was 125% of product Y's.

What is the amount of the joint cost allocable to product X assuming SAKAMA uses the physical units method of allocation?

- Updated: 18 Jul 20
- |
- Attempts: 72
- |
- Correct: 8

BM Company processes a single input up to the split-off point, at which stage two products, A and B are obtained. The joint costs prior to the split-off point is T.shs 1,200,000. Both product A and B can be further processed and sold in more refined form. 1,000 litres of product A can be further processed to yield 1,000 litres of super A at incremental and selling cost of T.shs 300,000; Super A sells for T.shs 1,800 per litre. 500 litres of product B can be further processed to yield 500 litres of super B at an incremental and selling cost of T.shs 200,000; super B sells for T.shs 1,400 per litre.

Assume that the company decides to further process A and B into Super A and B respectively. Assume also that, 20% of the output of each super A and super B is unsold at the end of the month.

**Required:**

Demonstrate how the joint costs will be allocated using:

- The estimated NRV method.
- The constant gross-margin percentage NRV method.

- Updated: 18 Jul 20
- |
- Attempts: 54
- |
- Correct: 23

KALIMBA SawMill manufacturers two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of T.shs 3,000,000 and results in 50,000 units of MSB and 70,000 units of CBL. Each MSB sells for T.shs 28, and each CBL sells for T.shs 40.

**Required**

- Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical units basis.
- Calculate the amount of joint cost allocated to mine support braces (MSB) on a relative sales value basis..
- Assume the commercial building lumber is not marketable at split-off point, but can be further polished and sized at a cost of T.shs 2,000,000 per production run. During this process, 5,000 units are unavoidly lost; these spoiled units have no value. The remaining units of commercial building lumber are sellable at T.shs 100 per unit. The MSB, although sellable at split-off point, are coated with a tar like preservative that cost T.shs 1,000,000 per production run. The braces are then sold for T.shs 50 each. Using Net Realizable Value basis, compute the completed cost assigned to each unit of CBL.

- Updated: 18 Jul 20
- |
- Attempts: 131
- |
- Correct: 51