Exercise 6-14 Computing Joint Costs—Sales Value at Split-Off and Net Realizable
ID: 2465219 • Letter: E
Question
Exercise 6-14 Computing Joint Costs—Sales Value at Split-Off and Net Realizable Value Methods LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of Product Y, and 1,000 units of Product Z is $50,000. The unit sales values of the three products at the split-off point are Product X–$30, Product Y–$100, and Product Z–$90. Ending inventories include 200 units of Product X, 300 units of Product Y, and 100 units of Product Z. In your interim calculations, round sales value percentages to two decimal places and allocated joint cost to three decimal places.
a. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their sales values at split-off.
b. Assume that Product Z can be sold for $120 a unit if it is processed after split-off at a cost of $10 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their net realizable values.
Explanation / Answer
a.
Product
Units
Unit sales value
Total sales value
Sales value percentage
Assignment of Joint cost
Joint cost per unit
Inventory Units
Joint cost included in inventory
(a)
(b)
(c)= (a)*(b)
(d)
(e) = (d) * $50,000
(f) = (e)/(a)
(g)
(f) * (g)
X
2000
$30.00
$60,000.00
24%
$12,000.00
$6.00
200
$1,200.00
Y
1000
$100.00
$1,00,000.00
40%
$20,000.00
$20.00
300
$6,000.00
Z
1000
$90.00
$90,000.00
36%
$18,000.00
$18.00
100
$1,800.00
$2,50,000.00
b.
Product
Units
Unit sales value
Cost after split off
Adjusetd Unit sales value
Total sales value
Sales value percentage
Assignment of Joint cost
Joint cost per unit
Inventory Units
Joint cost included in inventory
(a)
(b)
(c)= (a)*(b)
(d)
(e) = (d) * $50,000
(f) = (e)/(a)
(g)
(f) * (g)
X
2000
$30.00
$0.00
$30.00
$60,000.00
24%
$12,000.00
$6.00
200
$1,200.00
Y
1000
$100.00
$0.00
$100.00
$1,00,000.00
40%
$20,000.00
$20.00
300
$6,000.00
Z
1000
$120.00
$10.00
$110.00
$1,10,000.00
44%
$22,000.00
$22.00
100
$2,200.00
$2,70,000.00
Product
Units
Unit sales value
Total sales value
Sales value percentage
Assignment of Joint cost
Joint cost per unit
Inventory Units
Joint cost included in inventory
(a)
(b)
(c)= (a)*(b)
(d)
(e) = (d) * $50,000
(f) = (e)/(a)
(g)
(f) * (g)
X
2000
$30.00
$60,000.00
24%
$12,000.00
$6.00
200
$1,200.00
Y
1000
$100.00
$1,00,000.00
40%
$20,000.00
$20.00
300
$6,000.00
Z
1000
$90.00
$90,000.00
36%
$18,000.00
$18.00
100
$1,800.00
$2,50,000.00