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Module 4 Quiz

The document provides information on cost allocation for joint products using different methods. It includes: - Costs for August 2019 of $21,000 for the First Department of Swab Manufacturing Company allocated to products Blue Covy and Red Rapid using relative sales value and adjusted sales value methods. - Joint costs of $2,600,000 for three products (A, B, C) produced by MBC Manufacturing allocated using relative sales value, considering additional processing of Product A. - Joint costs of $539,200 for two products (Alpha, Omega) produced by Tonton Company allocated using constant margin method. - Joint costs of $72,900 for three outputs (leather

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219 views3 pages

Module 4 Quiz

The document provides information on cost allocation for joint products using different methods. It includes: - Costs for August 2019 of $21,000 for the First Department of Swab Manufacturing Company allocated to products Blue Covy and Red Rapid using relative sales value and adjusted sales value methods. - Joint costs of $2,600,000 for three products (A, B, C) produced by MBC Manufacturing allocated using relative sales value, considering additional processing of Product A. - Joint costs of $539,200 for two products (Alpha, Omega) produced by Tonton Company allocated using constant margin method. - Joint costs of $72,900 for three outputs (leather

Uploaded by

aey de guzman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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The following information relates to the cost and production for the First Department of

the Swab Manufacturing Company for the month of August 2019:

The total manufacturing cost applicable to Blue Covy and Red Rapid in this department
were P 21,000
1. What is the amount of joint costs to be allocated to each kilo of each product using
the Relative Sales Value at Split Off Point Method?
Solution:
Blue Covy 10,000 x 1.2 = 12,000 12/32 or 37.50%
Red Rapid 10,000 x 2 = 20,000 20/32 or 62.50%
32,000
Blue Covy 21,000x.375 = 7,875
Red Rapid 21,000x.625 = 13,125
Blue Covy 7,875/10,000 = P.7875 per kilo or P.79/kilo
Red Rapid 13,125/10,000 = P1.3125/kilo or P1.31/kilo
2. What is the amount of joint costs to be allocated to each kilo of each product using
the Adjusted Sales Value (Net Relative Sales Value) Method?
Solution:
Blue Covy = 12,000 – (0) = 12,000 12/30 or 40%
Red Rapid = 20,000 – (.2x10,000)= 18,000 18/30 or 60%
30,000
Blue Covy = 40% x 21,000 = 8,400
Red Rapid = 60% x 21,000 = 12,600
Blue Covy = 8,400/10,000 = P.84/kilo
Red Rapid = 12,600/10,000 = P1.26/kilo

3. MBC Manufacturing Company produces three products from a joint process and allocate joint costs
using the relative sales value method. Product A, Product B, and Product C. The joint costs for the last
quarter of the current year are given below:
Materials – P800,000
Direct Labor – P1,200,000
Manufacturing overhead – P600,000
Total: P2,600,000

The revenue from each product are as follows: Product A, P1,720,000; Product B, P1,280,000 and
Product C, P1,000,000
Management is considering processing Product A beyond the split off point, which would increase the
sales value of the Product A to P3,050,000. However, to process Product A, further means that the
company must rent some special equipment costing P700,000 per quarter. Additional materials and
labor also needed would cost P500,500 per quarter.
The incremental profit resulting from processing further Product A is.

Answer: P 129,500

Solution:
Regular Sale of Product A – (P1,720,000); while further process P 3,050,000
Incremental Sales: (3,050,000 – 1,720,000): 1,330,000
Additional Expenses:
Rent Expense 700,000
Materials and Labor 500,500
Incremental profit 129,500

4. Tonton Company manufactures two products, Alpha and Omega, from a joint process. One
production run costs P539,200 resulting to 1,000 units of Alpha and 4,000 units of Omega. Neither
product is saleable at split off but must be further processed such that the separable cost for Alpha is
P213.30 per unit and for Omega is P80 per unit. The final market value for Alpha is P510 and for Omega
is P360.
The joint cost allocated to Alpha using constant margin method is?

Answer: P 67,200

The joint cost allocated to Omega using constant margin method is?

Answer: P = 472,000

Solution:
Alpha (1000 x 510) = 510,000
Omega (4000 x 360) = 1,440,000
Total Sales P 1,950,000
Cost: 539,200
Alpha (1000 x 213.3) = 213,300
Omega (4000 x 80) = 320,000
Total Cost 1,072,500
Gross Profit 877,500
Gross Ratio: 940,800 / 1,920,000 = 45%
Cost Ratio = 100% - 45% = 55%
Total cost
Alpha: 510,000 x 55% = 280,500 – 213,300 = 67,200
Omega: 1,440,000 x 55% = 792,000 – 320,000 = 472,000
5. The following transactions are available from Lean Products Inc. a company that produced three
output, leather, suede and dog chews:
 Produced and sold 200 units of leather, 100 units of sued, and 25 units of dog chews
 Recorded P140,000 sales revenue from leather and suede. The cost of sales before accounting
for the by product was P73,250
 Incurred P100 to process the 25 units of dog chews to completion
 Received P450 in revenues from the sale of 25 units of dog chews.
The amount of joint costs allocated to leather using the physical measure assuming that NRV of dog
chews is deducted from the joint process costs.
Answer: P 48,533

The amount of joint costs allocated to suede using the physical measure assuming that NRV of dog
chews is deducted from the joint process costs.
Answer: P 24,267

Solution:
Joint cost 73,250 – (450-100) = 72,900 *allocated to leather and suede

Physical measures:
Leather: 200 .67% x 72,900 = P48,600
Suede: 100 .33% x 72,900 = P24,300
Total 300

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