Problem 1: 1.1

AFAR
WEEK 8
9312 - Joint Products

Problem 1:
1.1
No. of Barrels for A 800
No. of Barrels for B 1,000
1,800
Joint cost allocated to A:

(90,000 x 8/18) = 40,000
1.2
Relative sales value at split-off of A 80,000
Relative sales value at split-off of B 70,000
150,000
Relative sales value at split-off of A:

100 x 800 = 80,000
Relative sales value at split-off of B:

70 x 1,000 = 70,000
Sales of A:
Joint cost allocated to A: 100 x 800 = 80,000
90,000 x 80/150 = 48,000
Sales of B:
Joint cost allocated to B: 70 x 1,000 = 70,000
90,000 x 70/150 = 42,000
A B
Sales 80,000 70,000
COGS -48,000 -42,000
Gross Profit 32,000 28,000
1.3
NRV at split-off of A 32,000
NRV at split-off of B 50,000
82,000
NRV at split-off of A: Sales of A:

[(100 - 60) x 800] = 32,000 100 x 800 = 80,000
NRV at split-off of B: Sales of B:
[(70 - 20) x 1,000] = 50,000 70 x 1,000 = 70,000
Joint cost allocated to A: Selling Expense of A:

90,000 x 32/82 = 35,122 60 x 800 = 48,000
Joint cost allocated to B: Selling Expense of B:

90,000 x 50/82 = 54,878 20 x 1,000 = 20,000
A B
Sales 80,000 70,000
COGS -35,122 -54,878
Selling Expense -48,000 -20,000
Net Income/(Loss) -3,122 -4,878
1.4
Approx. NRV of A 80,000
Approx. NRV of B 80,000
160,000
Approx. NRV of A: Sales of A:

[(150 - 20 - 30) x 800] = 80,000 150 x 800 = 120,000
Approx. NRV of B: Sales of B:

[(120 - 30 -10) 1,000] = 80,000 120 x 1,000 = 120,000
Joint cost allocated to A: Cost of goods sold of A:

(90,000 x 80/160) = 45,000 [45,000 + (20 x 800)] = 61,000
Joint cost allocated to B: Cost of goods sold of B:

(90,000 x 80/160) = 45,000 [45,000 + (30 x 1,000)] = 75,000
Selling expense of A: (30 x 800) = 24,000

Selling expense of B: (10 x 1,000) = 10,000
A B
Sales 120,000 120,000
COGS -61,000 -75,000
Selling Expense -24,000 -10,000
Net Income/(Loss) 35,000 35,000
Problem 2:
2.1
Approx. NRV of A 300,000
Approx. NRV of B 100,000
400,000
NRV of By-product C:
[(30 x 200) - 4,000] = 2,000
Cost per unit of By-product C: Joint cost allocated to A:

2,000 / 200 = 10 (200,000 x 3/4) = 150,000
Sales of A: Cost per unit of A:

[(43.75 x 6,400) + (10 x 150)] = 281,500 [(150,000 + 50,000) / 8,000] = 25
Cost of Goods sold of A:

25 x 6,400 = 160,000
A
Sales 281,500
COGS -160,000
Gross Profit 121,500
2.2
Approx. NRV. Of A 300,000
Approx. NRV. Of B 100,000
400,000
NRV of By-product C: Joint cost allocated to B:

[(30 x 200) - 4,000] = 2,000 200,000 x 1/4 = 50,000
Cost per unit og By-product C: Cost per unit of B:

2,000/200 = 10 [(50,000 + 30,000) / 2,000 = 40
Sales of B: Cost of goods sold of B:

65 x 1,800 = 117,000 40 x 1,800 = 72,000
B Other Income of B:
Sales 117,000 10 x 150 = 1,500
COGS -72,000
Gross Profit 45,000
Other Income 1,500
Net Income 46,500
2.3
Approx. NRV. Of A 300,000
Approx. NRV. Of B 100,000
400,000
NRV of By-product C: Joint cost allocated to A:
[(30 x 200) - 4,000] = 2,000 198,000 x3/4 = 148,500
Sales of A: Cost per unit of A:

(43,75 x 6,400) = 280,000 [(148,500 + 50,000) / 8,000] = 24.8125
Adjusted joint cost: Cost of goods sold of A:

200,000 - 2,000 = 198,000 24.8125 x 6,400 = 158,800
A
Sales 280,000
COGS -158,800
Gross Profit 121,200
Problem 3:
3.1
Fabrication Assembly
Gen. Fadmin 46.25/90 43.75/90
Fmaintenance 88/160 72/160
Gen. Fadmin OH allocated to Fabrication: Fmaintenance OH allocated to Fabrication:

160,000 x 46.25/90 = 82.222 425,000 x 88/160 = 233,750
Gen. Fadmin OH allocated to Assembly: Fmaintenance OH allocated to Assembly:

160,000 x 43.75/90 = 77,778 425,000 x 72/160 = 191,250
Fabrication Assembly
Gen. Fadmin 82,222 77,778
Fmaintenance 233,750 191,250
315,972 269,028
3.2
Fmaintenance Gen. Fadmin Fabrication
Fmaintenance 40/200 88/200
Gen. Fadmin 46.25/90

Fmaintenance 425,000 160,000 6,730,000
Gen. Fadmin -425,000 85,000 187,000
-245,000 125,903
7,042,903
3.3
Fmaintenance 0.20 0.44
Gen. Fadmin 0.10 0.4625
FM = 425,000 + .10FA
FA = 160,000 + .20FN
FM = 425,000 + .10 (160,000 + .20FM) FA = 160,000 + .20 (450,000)

FM = 425,000 + 16,000 + .02FM FA = 160,000 + 90,000
FM = 441,000 +.02FM FA = 250,000
FM = (441,000 + .98) = 450,000
ted to Fabrication:
ted to Assembly:
Assembly
72/200
43.75/90
Assembly
4,850,000
153,000
119,097
5,122,097
Assembly
0.36
0.4375

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AFAR

9312 - Joint Products

Joint cost allocated to A:

Relative sales value at split-off of A:

Relative sales value at split-off of B:

NRV at split-off of A: Sales of A:

Joint cost allocated to A: Selling Expense of A:

Joint cost allocated to B: Selling Expense of B:

Approx. NRV of A: Sales of A:

Approx. NRV of B: Sales of B:

Joint cost allocated to A: Cost of goods sold of A:

Joint cost allocated to B: Cost of goods sold of B:

Selling expense of A: (30 x 800) = 24,000

Cost per unit of By-product C: Joint cost allocated to A:

Sales of A: Cost per unit of A:

Cost of Goods sold of A:

NRV of By-product C: Joint cost allocated to B:

Cost per unit og By-product C: Cost per unit of B:

Sales of B: Cost of goods sold of B:

Sales of A: Cost per unit of A:

Adjusted joint cost: Cost of goods sold of A:

Gen. Fadmin OH allocated to Fabrication: Fmaintenance OH allocated to Fabrication:

Gen. Fadmin OH allocated to Assembly: Fmaintenance OH allocated to Assembly:

Fmaintenance Gen. Fadmin Fabrication

FM = 425,000 + .10 (160,000 + .20FM) FA = 160,000 + .20 (450,000)

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