ABC Ltd operates a simple chemical process to convert a single material into three separate items, which are X,Y and Z. All three end products are separated simultaneously at a single split off point. Product X and Y are ready for sale immediately after split off point without further processing or any other additional costs. Product Z however, is processed further before being sold. There is no available market price for Z at the split off point.

 The selling prices quoted here are expected to remain the same in the coming year. During 2012, the selling prices of the items and the quantities sold were: X= 186 tonnes sold at $1,500 per tonne Y=527 tonnes sold at $1,125 per tonne Z= 736 tonnes sold at $750 per tonne Total joint costs for the year amounted to $625,000. An additional $310,000 was spent to finish product Z, There were no opening inventories of X,Y and Z. At the end of the year, the following inventories of complete units were on hand:

 

X=180 tonnes;

 Y=60 tonnes;

Z=25 tonnes. 

There was no opening or closing work in progress.

Required: (i) Calculate the cost of inventories of X,Y and Z for Statement of Financial position purpose and for Cost of goods sold for income statement purposes as at 31 March 2013, using: (a) NRV method to apportion joint costs (b) Physical units method.

 

Answer rating: 100% (QA)

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