Joint and By- Products

I. K Co. produces four products, which have a manufacturing cost of P224,000 at the split-off point. Data
pertaining to these products ( WW, XX, YY, and ZZ) follow:

Separate Costs after Split-Off

Sales price Disposal/ Separate Ultimate Weight

per unit at Separate Cost if final sale Factor
Units Split-off cost at processed (Price per per unit
Produced Split-off further Total unit)

WW 20,000 P12.00 P18,000 P22,000 P40,000 P15.00 3.0

XX 32,000 3.50 14,00011,000 25,000. 5.00. 5.5
YY 36,000 6.00 16,00014,000 30,000. 8.00 5.0
ZZ 24,000 5.50 12,000 9,000 21,000. 7.00 6.0

*marketing costs regardless when sold at split-off point.

1. Using Physical measure/average unit cost/production output method, the average unit cost
amounted to:
a. None c. P1
b. P0.40 d. P2

2. In relation to No.1, the share in joint cost for Product WW amounted to:
a. None c. P20,000
b. P8,000 d. P40,000

3. Using the sales value at split-off point approach the percentage of joint cost to sales value:
a. 32% c. 100%
b. 40% d. 60%

4. In relation to No. 3, the share in joint cost for Product YY amounted to:
a. None c. P70,400
b. P69,120 d. P72,000

5. Using the approximated (estimated) net realizable value at split-off or hypothetical market value
approach, the percentage of joint costs to approximated/estimated value at split-off point:
a. 28% c. 35%
b. 32% d. 40%

6. In relation to No. 5, the unit cost for Product WW amounted to:

a. P4.54 c. P5.64
b. P4.74 d. P6.00

II. D Co., a new firm, manufactures two products, J and K, in a common process. The joint costs amount to
P80,000 per batch of finished goods each batch results in 20,000 liters of output, of which 80% are J and 20%
are K.

The two products are processed beyond the split-off point, with D Co. incurring the following separable
costs: J, P2 per liter; K, P5 per liter. After additional processing, the selling price of J is P12 per liter, and
selling price of K is P15 per liter.

1. Determine the proper allocation of joint costs to Product J if the company uses the net-realizable
value method.
a. None c. P64,000
b. P16,000 d. P80,000

2. Assume that D Co. sold all of its production of K during the current accounting period. Compute K’s
gross margin.
a. None c. P36,000
b. P24,000 d. P60,000

III. N Co. manufactures three different products from a single row material. A summary of production costs
shows:
Products
G S M Total
Output in kilograms 80,000 200,000 160,000 440,000
Sales in kilo grams 70,000 180,000 150,000 400,000
Sales price per kilogram P.75 P1.00 P1.50 -

Separable Costs
G S M total cost
Joint and By- Products
Production Costs:
Materials P0 P0 P0 P90,000
Direct labor 3,000 20,000 30,000 80,000
Variable Factory OH 2,000 10,000 16,000 45,000
Fixed factory OH 15,000 34,000 30,000 115,000
Total P20,000 P64,000 P76,000 P330,000

All separable costs have been assigned to products but the joint costs has not been allocated.

1. The amount of joint costs attributable to materials:

a. None c. P53,000
b. P27,000 d. P90,000

2. The amount of joint costs attributable to direct labor:

a. None c. P53,000
b. P27,000 d. P80,000

3. The amount of joint costs attributable to variable factory overhead:

a. None c. P28,000
b. P17,000 d. P45,000

4. The amount of joint costs attributable to fixed factory overhead:

a. None c. P79,000
b. P36,000 d. P115,000

5. Determine the amount of joint costs to be allocated:

a. None c. P170,000
b. P160,000 d. P330,000

For items 6 to 11, use market value method in allocating joint costs

6. The percentage of joint cost to market value needed to allocate the joint cost:
a. 12% c. 48%
b. 40% d. 50%

7. The unit cost assigned to product G:

a. None c. P0.40
b. P0.25 d. P0.50

8. The amount of sales of Product S to be reported in the income statement amounted to:
a. None c. P180,000
b. P136,000 d. P200,000

9. The cost of goods sold of Product M amounted to:

a. None c. P148,125
b. P82,000 d. P158,000

10. The total gross profit amounted to:

a. None c. P155,575
b. P82,000 d. P157,000

11. The total cost assigned to ending inventory amounted to:

a. None c. P155,575
b. P28,075 d. P157,000