MANILA

PRACTICAL ACCOUNTING PROBLEMS IIGUERRERO/GERMAN/DE J~SUS/LiM

JOINT AND BY PRODUCT COSTING

COST ACCOUNTING

Problem 1 elm~",-Company produces four solvents from the same process: A, B, C, and D. Joint productcosts ar P45,OOO.(Round all answers to the nearest peso.)-------'

Finalsales

. priceper barrel

, P40.5030.0046.5058.50

D~Sales price cost- Furtherper barrel per bar~ processing

Barrels at split-off t s~off costs2,250 j P30.00 fJ~) P19.50 t.,,!,1f P6.003,000...... 24.00 1-1 om) 12.00?' I 7.504,200 -,.( 33.00 11?,(uJU 21.00.f 12.002,OOQ )< 45.00. 'Jl) Ii. 28.50 I~ ~ 13.50"'J) --~ 'l~ "

J I lOCi 01\If Solmix sells the products after further processing, the following disposal costs will be incurred: A,P7.50; B, P3.00; C, PlO.50; D, P18.00.

ABCD

1. sing a physica~ measurement method, what_amount 0/ joint processing cost is allocated toProductB?

A. P17,475B. P6,555

@)P8,738D. P12,235

2 Using sales value at split-off, what amount ofjoint processing cost is allocated to Product A?

A. P22,165a. P5,910C. Pll,380D P5,542

/

. 3 Using net realizable value at sp1it~ what amount 0/ joint processing cost is allocated toProductC?

@PlO,850B. PS,085C. P7,7S0D. P21,315

A JJru '< lV.flj -:;b 1;jUJ) 12- ~C J'Ij"J ., 11;. s:

D ',IT) ., t.rf-=:;:j I 120'10

Problem 2. EE Company produces chemical H and I. The processing also yields by product X, anotherchemical. The joint costs of processing is reduced ~YJhe f\J.RV Qf~~oint costs for the month of Augustwere P2,900,OOO.Below are additional data: -

-Product

HI

X

Units1,0002,000

®

Market ValueP5,OOO,OOOP2,500,OOOP ~O,OOO

r= m,VVO. ( /21),o-r.

C

J, r ,/ITL! ~~O,:9'1

JO ~,go,vl)l)Page 2

An additional P120,OOOwere spent to complete the processing of X. The company uses the NRV methodof allocating joint costs. '

how much is the amount of joint cost allocated to I?

hjPl,2GO,OOO~P 840,000

C. Pi,G80,OOO'D. Pi,GOO,Ooo

t+ f;JI :J.SfI 2.,} A.[r yzl20 f'N :::-"':1,(

Problem 3. MM company produces' joint products A and B together with b'i ...Qroduct C) A is sold at split~ but ~ and C_ undergo ad itional processing. Pr?duction data pertaining to these products for yearended December 31, 2012 are as follows:

".-A B C Total SD/)<Joint Costs Pl,2oo,OOO rl.t3()/<lSeparable costs -1'D<... P435,OOO PSG,Ooo P 491,000 16J(Production in pounds 100,000 150,000 40,000 290,000Sales price per pound P5 P9 1',""),1 P2.5

There are n~gjn lng or emling inventories. No materials are sp~d in production. Joint costs areal ocated t~pint p!yducts to..JIchieve the same ross profit rate for eachJoi~ product. Net revenuefrom by product is deducted from joint roduction costs of the main.Jlroduct. ' ICrli ~, - - 7O~t)q(;PJ - '6 ,VII VIe =- /<.,1J7) I vI> C ( Irq/.M

How much is the share of B in the joint cost? r ¥I.J, rr f _-k"I-I- !P843,G58 '" 1

, , x 40 .,.- rA. n ',I) !G'"tw, Uul)

v

B. P747,520 z:

C. P430,OOO r S:u (TlllJ

& -P72G,OOO/ f. J. "

oblem 4•. RR Company makes two products Y and Z. They are initially processed from the samematerials an? then after split off, further processed separately. Additional information is as follows:

Final sales valueSales value at split offCost beyond split offJoint cost prior to split off

Y1'4050/

P33,OOOP 9,000

ZP49500P47,OOOPH,OOO

TotalP90,OOOP80,OOOP 20,000P 15,000

~USingthe dua Net Realizable Value approach, how much is the joint cost assigned to Yand Z? .---- - - - ~ . - --- ... ~ ...

A. P6,OOOand P9,OOOB. P6,188 and P8,812C. P6,750 and P8,250D. P7,500 and P7,500

Problem 5. JKLM Company buys Article G for PO.80 unit. At the end of processing in Department 1Article G split into products 0, E and F. Product 0 is sold at s lit-off point with no further rocessi ,Eand F require further processing before they can be_sold; E~e.rocesse~n Department 2; and F isprocessed in Department 3. The following is a summary of costs and other related data for the yearended July 30, 2012.

------

Department 1 Department 2 Department 3Costof Article GDirect MaterialsDirect LaborFactory overhead

Rl440~00q;P 210,000P 150,000

r.P 675,000 ...•P 315,OOOJ);.

r

P975,OOO1'735,000 J \.Of

~

Unit soldUnits on hand at July 30, 2012Sales

Product D300,000150,000450,000 I

Product E450,000

Product F675,000 r»

225,000'" o.fttl

P2,126,250 I} - ;c,?JPl,440,OOO ~'~

JKLMusesthe~mated·n~lizable ~method~o allocate joint co~.

1. The cost of Products Esold for the year ended July 30, 2012--- --A. P1,470,OOOB. P1,440,OOO

P 990,000D. Pl,350,OOO

/2. The co~t of ending inventory for Product D

DG.lI,OOJt: I,tWO 1<

f &.

1b r.. vd' itCo1\K 1fJ1-tKO' 'l..01!,I11m st.'?f7) .

A. P270,OOOP225,ooOP180,OOOP540,OOO

Problem 6. The ABCChemical Company produces a product known as "minergy" from which by productresults.

o This by-product can be sold at PIO-per ound.

o The manufacturing costs of the main product and by-product up to the point of separation forthe three months ended March 31, 2012 follows: Materials, P175,OOO;Labor, PIOO,OOO;Overhead, PlOO,OOO. ~ - )

o The units processed were 35,000 pounds of the main product and 3,500 pounds of the by-product.

- \,o During the period 31,500 pounds of the "minergy" were sold at P48., while the company was

able to sell 2,625 pounds of the by-product.

o _Selling and administrative expenses related to the main product amounted to P210,OOO.

- o Disposalcost per each unit of the by-product is P2.

Assume that the by-product is inventoried and recorded at (;.e.t. realizable value. The net realizable.value of the by-product reduces the manufacturing costs oj "minergy". What is the unit cost of"minergy"? Assume that the by-product is recorded as r,ealized. What;s the cost of inventory ofminergy? -- <:

C

A. PlO.71; P37,500r-s:. P9.9l7,P37,500"C. P9.91; P34,700 oJ

D. PlO.71; P34,700

-

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JUST IN TIME/BACKFLUSH COSTING < •

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.Problem 1. The MNO Manufacturing Company uses a Materials and In-Process (MIP) inventory account.At the end of each month, all inventories are counted, their conversion costs components areestimated, and inventory account balances are adjusted accordingly. Raw materials is backflushed fromMIP account to Finished Goods account. The following data is for the month of August:

,J3eginning balance of MIP accountConversion cost incurred

/Raw materials purchasedConversion cost allocated--Ending balance of MIP account.>The amount of direct materials and conversion costs to be backflushed to finished goods are:

P 67,7258,400

1,190,0009,275

73,325

. P1,184AOO and P9,275 respectively . ./

. P1,190,OOOand P9,275 respectively.C. ~ P1,184AOO and P8AOO respectively.D. P1,190,OOOand P8,'400 respectively.

Problem 2. DO Company uses a Materials and In process (MIP) account and charges all conversion costto Cost of Goods Sold (CGS). At the end of each month, all inventories are counted, their conversion costcomponents are estimated and inventory account balances are adjusted. Raw material cost isbackflushed form MIP to finished goods. The following information is for the month of August:

• Beginning balance of MIP account• Beginning balance of Finis d Goods accoant, i!1c1udinE

P 2 50 of conversion cost• Raw materials received on credit• Ending balance of M~ccount• Ending balance of Finished Goods account, including

PlO,OOOof conversion cost

700,00060,00075,000

A. P690,500P693,000

C. P690,OOOD. P700;000

How much is t~e materiDI cost of the units com leted?

Problem 3. The EFG Corporation manufactures electrical meters. For October, there were nobe,ginniog ioy-e.n1Q.desof materials. EFG uses a Just in Time system and backflush costing withthree rigger points far making e~tries to recor heir manufacturing process. EFG's Octoberstandard costs per meter are . ct materia~-Pl andCOjWersion costs, P120. The followingdata pertains to October operations:

Materials purchasedConversion costs incurredNumber of finished unitsNumber of units sold

P825,OOO660,000

5,250 units5,000 units

What are the balances of MIP inventory and Finished Goods inventory accounts at the end of••October?

A. P82S,OOOand P67,500, respectively.P825,OOOand Pl,417,500, respectively.

C. P37,500 and P67,500, respectively.D.' 1'37,500 and Pl,417,500, respectively.

Problem 4. Vex, general manager of AB corporation, provided the following information fortransactions that occurred during August. The corporation uses liT costing system.

o Raw materials purchased and requisitioned for product were P84,OOO

o Direct Labor costs of P78,OOOwere incurred

o Actual factory overhead costs amour.ted to P250,OOO

o Applied conversion costs totaled P340,OOO.This included P78,OOOof direct labor

o,

How much is the balance in Finished Goods account in August 31?••..... - .-.A. P412,OOOdebitCD P424,OOOdebitC. P412,OOOcreditD. P424,OOOcredit

fC

Problern S. Finale Company has a cycle time of 3 days, uses a Materials and In Process (MIP)account, and charges all conversion costs to Cost of Goods Sold. At the end of each month, allinventories are counted, their conversion costs components are estimated, and inventoryaccount balances are adjusted. Raw material cost is backflushed from MIP to Finished Goods.The following information is for August:

Beginning balance of MIP account, including P3,750of conversion costs

Beginning balance of finished goods account,including P12,500 of conversion costs

Raw materials received on creditDirect labor cost, P468,750; Factory overhead applied,

P562,500Ending MIP inventory per physical count, including

P5,625 of conversion costsEnding finished goods inventory per physical count,

including PlO,940 of conversion costs

What is the c«2!!v~rs~ncosts ~ ~old in A~ust?P1,027,815 C. Pl,033,125

B. Pl,030~935/ D. P1,031,250

P 36,565a~:;--10 C • I

'; IIP.l.9 3~r~ (U !

HIO--IOq.WtS(IOQQO )

~9V

37,500703,125

1,031,250

40,000

32,815