Question

Webster Company produces 35,000 units of product A, 30,000 units of product B, and 13,000 units of product C from the same manufacturing process at a cost of $370,000. 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 28,000 units of A, 29,000 units of B, and 13,000 units of C. The firm uses the net realizable value method to allocate joint costs and by-product costs. Assume no beginning inventory. Required: 1. What is the value of the ending inventory of product A? 2. What is the value of the ending inventory of product B?

Answer 1

Data Classification: Not set Unrestricted E с D 1 Particulars 2 Joint Cost 3 Less: Sale of unit C 4 Net Joint cost to be allocated 5 в Amount $ 370,000 $ 13,000 $ 357,000 7 Particulars 8 No. of units obtained 9 Unit Selling Price 10 Sales Value 11 Allocation of Joint cost 12 Joint Cost Per Unit 13 Ending Inventory in Units 14 Ending Inventory Product A Product B Total 35000 30000 65000 $ 20 $ 10 $ 700,000 $300,000 $1,000,000 $ 249,900 $ 107,100 $ 7.14 $ 3.57 7000 1000 $ 49,980 $ 3,570

Data Classification: Not set Unrestricted Confidential - Highly Confidential - 1 Particulars 2 Joint Cost 3 Less: Sale of unit C 4 Net Joint cost to be allocated Amount 370000 =13000 =B2-B3 Total =SUM(B8:08) 7 Particulars 8 No. of units obtained 9 Unit Selling Price 10 Sales Value 11 Allocation of Joint cost 12 Joint Cost Per Unit 13 Ending Inventory in Units 14 Ending Inventory Product A 35000 20 =B8*B9 =B4*B10/D10 =B11/B8 =35000-28000 =B12*B13 =SUM(B10:010) Product B 30000 10 =C8*C9 =B4*c10/D10 =C11/08 =30000-29000 =C12*C13