The LMN Company manufactures joint products X and Y as well as by-product Z. Cumulative joint cost
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Question:
The LMN Company manufactures joint products X and Y as well as by-product Z. Cumulative joint cost data for the period show P204,000 representing 20,000 completed units processed through the Refining Department at an average unit cost of 10.00. Costs are assigned to X and Y by the market value method, which considers further processing costs in subsequent operations. To determine the cost allocation to Z, the market value ( reversal cost) method is used.
Additional data:
| Product Z | Product X | Product Y | |
| Quantity processed | 2,000 | 8,000 | 10,000 |
| Sales price per unit | P6.00 | P20 | P25 |
| Further processing cost per unit | P2.00 | P5 | P7 |
| Marketing and administrative expenses | |||
| Expense per unit | P1.00 | ||
| Operating profit per unit | P1.00 |
Required:
A. Compute the joint cost allocated to Z
B. Allocate the remaining joint cost to X and Y
Expert Answer:
A To compute the joint cost allocated to Z we will use the market value reversal cost method In this ... View the full answer
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