Question

Exercise 7-33 Joint and By-Product Costing (Appendix) [LO 7-6, 7-7] E Webster Company produces 36,000 units of product A, 28,000 units of product B, and 11,000 units of product C from the same E manufacturing process at a cost of $350,000. A and B are joint products, and C is regarded as a by-product. The unit selling prices of the products are $20 for A, $10 for B, and $1 for C. None of the products requires separable processing. Of the units produced, Webster Company sells 29,000 units of A, 27,000 units of B, and 11,000 units of C. The firm uses the net realizable value method to allocate joint costs and by-product costs. Assume no beginning inventory. Required: E 1. What is the value of the ending inventory of product A? 2. What is the value of the ending inventory of product B? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the value of the ending inventory of product A? (Do not round intermediate calculations.)

Answer 1

Total Particulars Units sold (A) Units produced (B) Sales price (0) Sales value of production (BºC) =D Less: Separable costs ("E) Net realizable value (NRV) (D-E) =F NRV of joint products % of net realizable value (F/Total cost) = G Product A 29,000 36,000 20 720,000 Product B 27,000 28,000 10 280,000 Product C 11,000 11,000 11,000 720,000 720,000 72.00% 280,000 280,000 28.00% 11,000 11,000 1,011,000 1,011,000 100% 350,000 (11,000) 339,000 Total joint cost Less: NRV of by product Allocated joint cost (339000*G) = H Unit cost of production (H/B) = I Cost of goods sold (A*I) = J Ending inventory (H-J) 244,080 6.78 196,620 47,460 94,920 3.39 91,530 3,390 11,000 299,150 Value of ending inventory of Product A is $ 47,460/. Value of ending inventory of Product B is $ 3,390/.