Question

Webster Company produces 29,000 units of product A, 24,000 units of product B, and 12,500 units of product C from the same manufacturing process at a cost of $365,000. A and B are joint products, and C is regarded as a by-product. The unit selling prices of the products are $40 for A, $35 for B, and $2 for C. None of the products requires separable processing. Of the units produced, Webster Company sells 22,000 units of A, 23,000 units of B, and 12,500 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? 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.) Ending inventory < Required 1 Required 2 > 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 B? (Do not round intermediate calculations.) Ending inventory < Required 1 Required 2 > + Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $360,000 for a standard production run that generates 240,000 pints of Smooth Skin and 110,000 pints of Silken Skin. Smooth Skin sells for $3.10 per pint, while Silken Skin sells for $5.10 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off point, how much of the joint cost of each production run is allocated to Smooth Skin using the relative sales value method? 2. If no separable costs are incurred after the split-off point, how much of the joint cost of each production run is allocated to Silken Skin using the physical measure method? 3. If separable processing costs beyond the split-off point are $1.10 per pint for Smooth Skin and $1.70 per pint for Silken Skin, how much of the joint cost of each production run is allocated to Silken Skin using a net realizable value method? 4. If separable processing costs beyond the split-off point are $1.10 per pint for Smooth Skin and $1.70 per pint for Silken Skin, how much of the joint cost of each production run is allocated to Smooth Skin using a physical measure method? 1. Relative sales value method - Smooth Skin 2. Physical measure method - Silken Skin 3. Net realizable value method - Silken Skin 4. Physical measure method - Smooth Skin

Answer 1

Units (No.s): A summary Closing Inventory a Units Produced Units Sold Sale Price Sales Value Sales Proportion A 7000 29000 22000 40 880000 52% B 1000 24000 23000 35 805000 48% Total 8000 53000 45000 1685000 (Selling Price * Units Sold) (Sales Value for Units sold/Total Sales Value) Costs: A summary Total Cost 190623 174377 365000 (Costs allocation in proportion of Sales Value to Total Sales Amount) Cost p.u. 6.57 7.27 Costs / No. of Units Produced Cost of Inventory 46,012.48 7,265.70 Value of Inventory will be lower of Cost or Market Price. Notes: 1 Total Cost for each product is Total Cost Sales Proportion e.g. for A 365000*52% 2 Cost p. u. is (Total Cost of product (as per 1)/No. of Units Produced for the product) e.g. for A 190623/29000 3 Cost of Inventory is Cost p.u. * No. of Units remaining in Closing Inventory e..g for A 6.57*7000 =46012.48

Value of Inventory A is $46012~

Value of Inventory B is $7266~