MANILA

PRACTICAL ACCOUNTING PROBLEMS II

GUERRERO/GERMAN/DE J~SUS/LiM COST ACCOUNTING

JOINT AND BY PRODUCT COSTING

Problem 1 elm~",-Company produces four solvents from the same process: A, B, C, and D. Joint product
costs ar P45,OOO.(Round all answers to the nearest peso.)
-------'
D~ Final
Sales price cost- Further sales
per barrel per bar~ processing . price
Barrels at split-off t s~off costs per barrel
A 2,250 j P30.00 fJ~) P19.50 t.,,!,1f P6.00 , P40.50
B 3,000...... 24.00 1-1 om) 12.00?' I 7.50 30.00
C 4,200 -,.( 33.00 11?,(uJU 21.00.f 12.00 46.50
D 2,OOQ )< 45.00. 'Jl) Ii. 28.50 I~ ~ 13.50 58.50
"'J) --~ 'l~
J I lOCi 01\
"

If Solmix sells the products after further processing, the following disposal costs will be incurred: A,
P7.50; B, P3.00; C, PlO.50; D, P18.00.

1. sing a physica~ measurement method, what_amount 0/ joint processing cost is allocated to

ProductB?

A. P17,475
B. P6,555
@)P8,738
D. P12,235

2 Using sales value at split-off, what amount ofjoint processing cost is allocated to Product A?

A. P22,165
a. P5,910
C. Pll,380
D P5,542
/

.3 Using net realizable value at sp1it~ what amount 0/ joint processing cost is allocated to
ProductC?
A JJru '< lV.flj -:;
@PlO,850 b 1;jUJ) 12- ~
B. PS,085
C J'Ij"J
D ',IT)
., 11;.
.,
s:

t.rf-=:;:
j I 120'10
C. P7,7S0
D. P21,315

- Problem 2. EE Company produces chemical H and I. The processing also yields by product X, another
chemical. The joint costs of processing is reduced ~YJhe f\J.RV Qf~~oint costs for the month of August
were P2,900,OOO. Below are additional data: -

Product Units Market Value

H 1,000 P5,OOO,OOO
I 2,000 P2,500,OOO
X
P ~O,OOO
 r= m,VVO J, r ,/ITL
. ( /21),o-r. ! ~~O,:9'1

C JO ~,go,vl)l)
Page 2

An additional P120,OOOwere spent to complete the processing of X. The company uses the NRV method
of allocating joint costs. '

how much is the amount of joint cost allocated to I?

hjPl,2GO,OOO t+ f;J
~P 840,000 I :J.SfI 2.,} A.[r yzl20 f'N :::
C. Pi,G80,OOO'
D. Pi,GOO,Ooo
-
"':1,(

Problem 3. MM company produces' joint products A and B together with b'i ...Qroduct C) A is sold at split
~ but ~ and C_ undergo ad itional processing. Pr?duction data pertaining to these products for year
ended December 31, 2012 are as follows:

Joint Costs
A B C Total
Pl,2oo,OOO
-".
SD/)<
rl.t3()/<l
Separable costs -1'D<... P435,OOO PSG,Ooo P 491,000
Production in pounds 100,000 150,000 40,000 290,000
16J(
Sales price per pound P5 P9 1',""),1 P2.5

There are n~gjn lng or emling inventories. No materials are sp~d in production. Joint costs are
al ocated t~pint p!yducts to..JIchieve the same ross profit rate for eachJoi~ product. Net revenue
from by product is deducted from joint roduction costs of the main.Jlroduct.
, -
'
- 7O~t)q(;PJ - '6ICrli ~
,VII V

Ie =- /<.,1J7) C ( Irq/.M
How much is the share of B in the joint cost? r I.J,
I

rr
vI>
f _-k"I-I- !
,
A. P843,G58 '" 1
, x 40 n
.,.- r
v ',I) !G'"
B. P747,520 z: tw, Uul)
C. P430,OOO r S:u (TlllJ
-
& P72G,OOO/ f. J. "

oblem 4 . RR Company makes two products Y and Z. They are initially processed from the same
materials an? then after split off, further processed separately. Additional information is as follows:

Y Z Total
Final sales value 1'4050/ P49500 P90,OOO
Sales value at split off P33,OOO P47,OOO P80,OOO
Cost beyond split off P 9,000 PH,OOO P 20,000
Joint cost prior to split off P 15,000
~
USingthe dua Net Realizable Value approach, how much is the joint cost assigned to Y and Z? .
---- - - ~ . ---- ... ~ ... -
A. P6,OOOand P9,OOO
B. P6,188 and P8,812
C. P6,750 and P8,250
D. P7,500 and P7,500

Problem 5. JKLM Company buys Article G for PO.80 unit. At the end of processing in Department 1
Article G split into products 0, E and F. Product 0 is sold at s lit-off point with no further rocessi ,E
and F require further processing before they be_sold; E~e.rocesse~n can Department 2; and F is
processed in Department 3. The following is a summary of costs and other related data for the year
ended July 30, 2012.
------
 Department 1 Department 2 Department 3
Cost of Article G
Direct Materials Rl440~00q; r. r

Direct Labor P 210,000 P 675,000 ... P975,OOO1 '

Factory overhead P 150,000 P 315,OOOJ 735,000 J \.Of
);. ~

Product D Product E Product F

Unit sold 300,000 450,000 675,000 r

Units on hand at July 30, 2012 150,000 225,000'" o.fttl

Sales 450,000 I Pl,440,OOO ~'~ P2,126,250 I} - ;c,?J

JKLMusesthe~matedn~lizable ~method~o allocate joint co~.

1.
--- --
The cost of Products Esold for the year ended July 30, 2012
1b r.. vd' it
A. P1,470,OOO DG.lI,OOJ Co1\K 1fJ1-
B. P1,440,OOO t: I,tWO 1< tKO' 'l..01
P 990,000 !,I11m st.
D. Pl,350,OOO f &. '?f7) .
/
2. The co~t of ending inventory for Product D

A. P270,OOO
P225,ooO
P180,OOO
P540,OOO

Problem 6. The ABCChemical Company produces a product known as "minergy" from which by product
results.

o This by-product can be sold at PIO-per ound.

o The manufacturing costs of the main product and by-product up to the point of separation for
the three months ended March 31, 2012 follows: Materials, P175,OOO;Labor, PIOO,OOO;
Overhead, PlOO,OOO. ~ - )

o The units processed were 35,000 pounds of the main product and 3,500 pounds of the by-
product.
-
,
\

o During the period 31,500 pounds of the "minergy" were sold at P48., while the company was
able to sell 2,625 pounds of the by-product.

o _Selling and administrative expenses related to the main product amounted to P210,OOO.

- o Disposal cost per each unit of the by-product is P2.

.
Assume that the by-product is inventoried and recorded at (;.e.t. realizable value. The net realizable
value of the by-product reduces the manufacturing costs oj "minergy". What is the unit cost of
"minergy"? Assume that the by-product is recorded as r,ealized. What;s the cost of inventory of
minergy? -- <:
C

A. PlO.71; P37,500
r-s:. P9.9l7,P37,500"
C. P9.91; P34,700 oJ

D. PlO.71; P34,700
 11
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-
purcho{e ~ p,J' 0, ,. P A/~ x
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~ (al/oca )-
~ y
3.) f; ~f~(U fb so dllt. ( rx5 fe; xX
Q.. {jac 1\IJ~h11> fG -I. fG
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. Ce..- Page 4
~ , 1 r..:.1 /~r-de V
(
JUST IN TIME/BACKFLUSH COSTING < 10 C. '

.Problem 1. The MNO Manufacturing Company uses a Materials and In-Process (MIP) inventory account.
At the end of each month, all inventories are counted, their conversion costs components are
estimated, and inventory account balances are adjusted accordingly. Raw materials is backflushed from
MIP account to Finished Goods account. The following data is for the month of August:

,J3eginning balance of MIP account P 67,725

Conversion cost incurred 8,400
/Raw materials purchased 1,190,000
Conversion cost allocated
--
Ending balance of MIP account
9,275
73,325
.>
The amount of direct materials and conversion costs to be backflushed to finished goods are:

. P1,184AOO and P9,275 respectively . ./

. P1,190,OOOand P9,275 respectively.
C. ~ P1,184AOO and P8AOO respectively.
D. P1,190,OOOand P8,'400 respectively.

Problem 2. DO Company uses a Materials and In process (MIP) account and charges all conversion cost
to Cost of Goods Sold (CGS). At the end of each month, all inventories are counted, their conversion cost
components are estimated and inventory account balances are adjusted. Raw material cost is
backflushed form MIP to finished goods. The following information is for the month of August:

Beginning balance of MIP account

Beginning balance of Finis d Goods accoant, i!1c1udinE
P 2 50 of conversion cost
Raw materials received on credit 700,000
Ending balance of M~ccount 60,000
Ending balance of Finished Goods account, including 75,000
PlO,OOOof conversion cost

How much is t~e materiDI cost of the units com leted?

A. P690,500
P693,000
C. P690,OOO
D. P700;000
Problem 3. The EFG Corporation manufactures electrical meters. For October, there were no
be,ginniog ioy-e.n1Q.desof materials. EFG uses a Just in Time system and backflush costing with
three rigger points far making e~tries to recor heir manufacturing process. EFG's October
standard costs per meter are . ct materia~-Pl andCOjWersion costs, P120. The following
data pertains to October operations:

Materials purchased P825,OOO

Conversion costs incurred 660,000
Number of finished units 5,250 units
Number of units sold 5,000 units

What are the balances of MIP inventory and Finished Goods inventory accounts at the end of

October?

A. P82S,OOOand P67,500, respectively.

P825,OOOand Pl,417,500, respectively.
C. P37,500 and P67,500, respectively.
D.' 1'37,500 and Pl,417,500, respectively.

Problem 4. Vex, general manager of AB corporation, provided the following information for
transactions that occurred during August. The corporation uses liT costing system.

o Raw materials purchased and requisitioned for product were P84,OOO

o Direct Labor costs of P78,OOOwere incurred

o Actual factory overhead costs amour.ted to P250,OOO

o Applied conversion costs totaled P340,OOO.This included P78,OOOof direct labor

o
,
How much is the balance in Finished
..... Goods account in August
- 31?
.-.
A. P412,OOOdebit fC
CD P424,OOOdebit
C. P412,OOOcredit
D. P424,OOOcredit

Problern S. Finale Company has a cycle time of 3 days, uses a Materials and In Process (MIP)
account, and charges all conversion costs to Cost of Goods Sold. At the end of each month, all
inventories are counted, their conversion costs components are estimated, and inventory
account balances are adjusted. Raw material cost is backflushed from MIP to Finished Goods.
The following information is for August:

Beginning balance of MIP account, including P3,750 a~:;

of conversion costs
Beginning balance of finished goods account,
P 36,565 --
10 C I

including P12,500 of conversion costs 37,500 '; I

Raw materials received on credit 703,125 IP.l.9 3~r~ (U !
Direct labor cost, P468,750; Factory overhead applied,
P562,500
Ending MIP inventory per physical count, including
1,031,250 --HIO
IOq.WtS
(IOQQO )
P5,625 of conversion costs
Ending finished goods inventory per physical count,
including PlO,940 of conversion costs
40,000

32,815
~9V
What is the c2!!v~rs~ncosts ~ ~old in A~ust?
P1,027,815 C. Pl,033,125
B. Pl,030~935/ D. P1,031,250