You are on page 1of 4

A

B
C
D
E
1 Queston3
2
3 a)Physical Method
Joint Cost
Joint Product
Production unit Relative
Allocation
of
Joint Cost
4
Split-off-point
proportion
7,750,000 Goldex
5 $
300,000
0.545 $
4,227,273
6
Holdex
250,000
0.455 $
3,522,727
7
Total joint cost allocated
$
7,750,000
8
9
Goldex
Holdex
10 Closing Inventory (unit)
80,000
70,000
11 Joint cost/unit (W1)
$
14.09 $
14.09
12 Cost of ending inventory
$ 1,127,272.73 $
986,363.64
13
14 Working:
15 W1) $4,227,273 / 300,000units = $ 14.09 ; $3,522,727/ 250,000units = $14.09
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

A
B
32
33
34 b)Net Realisable Value Method
Joint Cost
Joint Products
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61

7,750,000.00 Goldex
Holdex
Total joint cost allocated

Sale Value of
Final Product
$
$

15,000,000
9,500,000

Seperable cost of
processing

NRV

$
$

*Working of Sale Value of Final Product of :


Goldex, $50 x 300,000
Holdex, $38 x 250,000
Goldex
Closing Inventory (unit)
X Joint cost/unit (w1)
Cost of ending inventory

Holdex
80,000
70,000
$
15.50 $
12.40
$ 1,240,000.00 $
868,000.00

Workings:
W1 ) $ 4,650,000/ 300,000 unit = $15.50 ; $3,100,000 / 250,000units = $12.40

3,000,000
1,500,000

$
$

12,000,000
8,000,000

Relative
proportion
0.60
0.40

Allocation of
joint cost
$ 4,650,000.00
$ 3,100,000.00
$ 7,750,000.00

A
B
C
D
62
63
64
65 c)Constant Gross Margin Method
66
Goldex
Holdex
Total
67 Sale value
$ 15,000,000.00 $ 9,500,000.00 $ 24,500,000.00
68 Joint cost
$ 4,500,000.00 $ 3,250,000.00 $ 7,750,000.00
Additional
69 processing cost
$ 3,000,000.00 $ 1,500,000.00 $ 4,500,000.00
70 Gross Margin
$ 7,500,000.00 $ 4,750,000.00 $ 12,250,000.00
Gross Margin (w1)
71 Percentage
50.00%
50.00%
50.00%
72 * Gross Margin = Sale Value X Gross Margin Percentage
73 *Joint Cost = Sale value - Additional processing cost - Gross Margin
74
75
Goldex
Holdex
76 Closing Inventory (unit)
80,000
70,000
77 Joint cost/unit (W2)
$
15.00 $
13.00
78 Cost of ending inventory
$ 1,200,000.00 $
910,000.00
79
80 Working:
81 W1) ($12,250,000 / $24,500,000 ) X 100% = 50.00%
82 W2) $4,500,000/ 300,000units = $15.00 ; $3,250,000 / 250,000units = $13.00
83
84
85
86
87
88
89
90
91

A
92
93
94
95
96
97
98
99
100
101
102

d)
For product Moldex
Incremental Revenue (W1)
Less: Incremental Cost
Incremental Loss

$
$
$

12.00
(14.00)
2.00

Working:
W1) $62-$ 50=$12
Therefore, the company should not produce Moldex, because there is a incremental loss of $ 2.