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Cost Accounting by Usry Chapter 6 Exercise 1

This document discusses costing of by-products and joint products from a manufacturing process. It provides journal entries to record the production and sale of a by-product. The by-product is transferred to finished goods after further processing. The document also shows a working to allocate joint costs between the main product and by-product using the market value method at the point of separation.

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Saadia Saeed
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2K views4 pages

Cost Accounting by Usry Chapter 6 Exercise 1

This document discusses costing of by-products and joint products from a manufacturing process. It provides journal entries to record the production and sale of a by-product. The by-product is transferred to finished goods after further processing. The document also shows a working to allocate joint costs between the main product and by-product using the market value method at the point of separation.

Uploaded by

Saadia Saeed
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MANAGERIAL AND COST ACCOUNTING MATZ, USRY AND HAMMER 9 th EDITION CHAPTER 6 - COSTING BY-PRODUCTS AND JOINT PRODUCTS

EXERCISE 1 REQUIRED

1)

Accounts Receivable Income from sales of by product ( By product sold without incurring additional cost 80,000 pounds for $ 0.36 per pound )

2)

Finished goods By product Work in process - Okay ( By product transferred to finished goods and reducing the main product cost by 80,000 pounds X $ 0.36 per pound )

3)

Work in process By product Payroll Applied Factory overhead Material ( Further processing of By product accounting for material, labour and factory overhead after separation ) Finished goods By product Work in process By product ( By product transferred to finished goods after processing )

4)

Work in process By product Work in process Okay (see working below) Payroll Applied Factory overhead Material ( Further processing of By product accounting for materail, labour and factory overhead and allocation of joint cost by the market value method ) Finished goods

By product Work in process By product ( By product transferred to finished goods after processing )

WORKING FOR JOURNAL ENTRY 4 Product Units

Okay By product

315,000 80,000

%age to allocate cost prior to separation = ($ 250,000+$200,000+$170,000) / $ 658,800 = $ 620,000

Subsidiary Ledger Debit / (Credit) $

General Ledger Debit Credit $ $ 28,800 28,800

28,800 28800 28,800

20,000 6,000 4,000 10,000

20,000 20,000 20,000

47,104 27,104 6,000 4,000 10,000

47,104

47,104

47,104

Per unit market Total market value at point of value at point of separation separation $ $ 2.00 630,000 0.36 28,800 658,800

Allocation of cost prior to separation $ 592,896 27,104 620,000 94.1105%

658,800 = $ 620,000 / $ 658,800 =

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