Question

West Coast Designs produces three products: super, deluxe, and generic. Super and deluxe are its main products; generic is a by-product of super. Information on the past month’s production processes follows: •In Department A, 286,000 units of the raw material X-1 are processed at a total cost of $597,398. After processing in Department A, 50 percent of the units are transferred to Department B, and 50 percent of the units (now unprocessed deluxe) are transferred to Department C. •In Department B, the materials received from Department A are processed at an additional cost of $210,000. Seventy percent of the units become super and are transferred to Department D. The remaining 30 percent emerge as generic and are sold at $5.20 per unit. The additional processing costs to make generic salable are $67,600. •In Department C, deluxe is processed at an additional cost of $980,000. A normal loss of 10 percent of the units of good output of deluxe occurs in this department. The remaining good output is then sold for $43 per unit. •In Department D, super is processed at an additional cost of $83,000. After this processing, super can be sold for $15 per unit.

Required: Prepare a schedule showing the allocation of the $597,398 joint cost to super and deluxe using the estimated net realizable value approach. Revenue from the sale of by-products should be credited to the manufacturing costs of the related main product. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

Super Deluxe Sales value after completion Sales revenue from Generic Separate processing costs: Department B Department C Department D Additional processing cost for Generic Approximate net realizable values

Answer 1

particulars Super Deluxe dales value $1501500 $5590000 atter completion (Note: a) $ 222080 cales revenue from generic (Note:6) Separate procening code: Department B. - $ 210000 Department c -$980000 Department D -$83000 Additional - $67600 procening cost for generic $1363980 $4610000 Approximate net realizable valeus

Note: a sale value after completion for Super - 286000 unils x 50 / x70/.x $15 = $ 1501500 sale valu after completion for Deluxe = 286000 units x 50.8 x 100 x$43 1107 = $ 5590000 as normal loss of 10% of units of good output of deluxe Note :b sales revenue from generic = 286000 units x 50 % x 30%. $5:20 - $ 2230 80

Total net realizable value & $ 13 63980 + $4610000. - $5923980 Tooted joint cost to Super & beluxe & $597398 cost allocation to super & $597398 × $136388 $5973980 F $136398 cost allocation to deluxe = $597398 × $4610000 $5973980 - $461000