Question

The following questions relate to Kyle Company, which manufactures products KA KB, and KC trom a point process. Joint product costs were $189,000 Adsitional information Units Sales Value at 84,000 60,000 24,000 $ 240,000 210,000 150,000 $330,000 270,000 240,000 42,000 30,000 KC Required: a. Assuming that joint product costs are allocated using the physical quantities (units produced) method, what was the total cost of product KA including $54,000 # processed tu intermediate calculations.) b. Assuming that joint product costs are allocated using the sales value at spilt-ff (net realizable value method), what was the total not round intermediate calculations.) cost of product KB (incuding the $42 000 O Type here to search

Answer 1

a. Total Cost of product KA=$ 148,500( note below)

Note:

Allocation of Joint cost as per Physical Quantities Method

Joint Process cost = $ 1,89,000

Total units=84000+60000+24000=168000

Joint cost per unit=$1,89,000/168000 units=$ 1.125/unit

Allocation of Joint Costs and calculation of total costs

Particulars	KA	KB	KC
Units	84000	60000	24000
Joint Costs	$ 94,500 (84000 units* $ 1.125/unit)	$ 67,500 (60000 units* $ 1.125/unit)	$ 27,000 (24000 units* $ 1.125/unit)
Cost post split-off	$ 54000	$ 42000	$ 30000
Total Costs	$ 148,500	$ 109,500	$ 57,000

b.Total Cost of product KB=$ 102352.9412 approx $ 102353(Net Realisable Value Method) ( note below)

    Total Cost of product KB=$ 108,150 (Sales Value at Split Off) ( note below)

Note:

Allocation of Joint cost as per Net Realisable Value Method and calculation of Total Costs

Particulars	KA	KB	KC
Sales Value(after processing)	$ 3,30,000	$ 2,70,000	$ 2,40,000
Less: Further processing costs	$   54,000	$   42,000	$    30,000
Net Realisable value	$ 2,76,000	$ 2,28,000	$ 2,10,000
Joint costs allocated	$ 73,058.8235	$ 60,352.9412	$ 55,588.2353
Cost post split-off	$ 54000	$ 42000	$ 30000
Total Costs	$ 127058.8235	$ 102352.9412	$ 85588.2353

Total Joint Process costs= $ 1,89,000

Total Net Realisable Value=$ 7,14,000

Joint cost allocated to KA=$ 1,89,000*$ 2,76,000/$ 7,14,000=$ 73,058.8235

Joint cost allocated to KB=$ 1,89,000*$ 2,28,000/$ 7,14,000=$ 60,352.9412

Joint cost allocated to KC=$ 1,89,000*$ 2,10,000/$ 7,14,000=$ 55,588.2353

Allocation of Joint cost as per Sales Value at Split Off and calculation of Total Costs

Particulars	KA	KB	KC
Sales Value at Split Off	$ 2,40,000	$ 2,10,000	$ 1,50,000
Joint costs allocated as per Sales value at split- off	$ 75,600	$ 66,150	$ 47,250
Post split off costs	$ 54000	$ 42000	$ 30000
Total Costs	$ 129,600	$ 108,150	$ 77,250

Total Joint Process costs= $ 1,89,000

Total Sales Value at Split Off=$ 6,00,000

Joint cost allocated to KA=$ 1,89,000*$ 2,40,000/$ 600,000=$ 75,600

Joint cost allocated to KB=$ 1,89,000*$ 2,10,000/$ 600,000=$ 66,150

Joint cost allocated to KC=$ 1,89,000*$ 1,50,000/$ 600,000=$ 47,250