Problem 1

Brant Corporation manufactures two products out of a joint process—Scout and Andro. The joint
(common) costs incurred are $400,000 for a standard production run that generates 70,000 pounds of
Scout and 30,000 pounds of Andro. Scout sells for $9.00 per pound while Andro sells for $7.00 per
pound.

1. If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of
each production run allocated to Scout on a physical-quantity basis is

2. If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of
each production run allocated to Andro on a sales value at splitoff basis is

1
3. If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.33 per
3
pound for Andro, the amount of joint cost of each production run allocated to Andro on a physical
quantity basis is

1
4. If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.33 per
3
pound for Andro, the amount of joint cost of each production run allocated to Andro on an estimated
net realizable value basis is

5. Assume the same cost information as in question 4. The amount of joint cost of each production run
allocated to Scout using the constant gross-margin percentage NRV method is

Problem 2

GEMS Company manufactures 4 products namely G, E and M and the by-product S. The
production costs totaled P600,000, which is composed of P250,000 materials, P150,000 labor and P200,000
overhead. The process yielded 20,000 units of GG, 12,000 units of E, 18,000 units of M and 2,500 units of S.
Products G, E, M and S weigh 3 pounds, 5 pounds, 4.2 pounds and 1 pound respectively. The sales value
for each of product G is P33, E is P35, M is P40 and S is P4.

Use all possible methods to allocate joint cost.

Problem 3
Gasoline Heating Oils Kerosene
Total market value of gallons sold P400,000 P285,000 P365,400
Market value per gallon P10 P6 P7
Beginning inventory (gallons) 10,275 20,000 25,000

The above table was used by the Trisikstin Company for allocating P450,000 of joint cost incurred
in October 2018 for Department A. During the month, the company had no ending inventory. No
additional processing costs were incurred. The Trisikstin Company uses a process cost system.

Use all the methods in allocating the joint cost and compute for the unit cost of each product.

Problem 4

Product Katran has been allocated $7,500 of total joint costs of $30,000 for the 1,500 units
produced. Katran can be sold at the splitoff point for $4 per unit, or it can be processed further with
additional costs of $2,000 and sold for $7 per unit. If Katran is processed further and sold, the result
would be
a. a break-even situation.
b. an overall loss of $1,500.
c. a gain of $2,500 from further processing.
d. a gain of $1,000 from further processing.
Problem 5

Tripiptin Company manufactures two products out of a joint process: Compod and Ultrasene.
The joint cost incurred are P2,500,000 for a standard production run that generates 120,000 gallons of
Compod and 80,000 gallons of Ultrasene. Compod sells for P20 per gallon while Ultrasene sells for
P32.50.

1. If there are no additional processing costs incurred after split – off point, calculate the amount of
joint cost allocated to Compod on a physical – units basis

2. If there are no additional processing costs incurred after split – off point, the cost to produce per
unit of Ultrasene on a physical – units basis is

3. If there are no additional processing costs incurred after split – off point, calculate the amount of
joint cost allocated to Ultrasene on a relative – sales - value basis.

4. If there are no additional processing costs incurred after split – off point, the cost to produce each
unit of Compod on a relative – sales - value basis is

5. Suppose the following additional processing costs are required beyond the split – off point in
order to obtain Compod and Ultrasene: P1 per gallon for Compod and P11 per gallon for
Ultrasene, calculate the amount of joint cost allocated to Compod on a net – realizable – value
basis.

6. Suppose the following additional processing costs are required beyond the split – off point in
order to obtain Compod and Ultrasene: P1 per gallon for Compod and P11 per gallon for
Ultrasene. Suppose also that Compod can be processed further into a product called
Compodalene, at an additional cost of P4 per gallon. Compodalene will be sold for P26 per gallon
by independent distributors. The distributor’s commission will be 10% of the sales price. Should
Tripiptin sell Compod or Compodalene?

Problem 6

Trisebentin Chemical Company manufactures two industrial chemical products in a joint process.
In May, 10,000 gallons of input costing P60,000 were processed at cost of P150,000. The joint process
resulted in 8,000 pounds of Resoline and 2,000 pounds of Krypto. Resoline sells at P25 per pound while
Krypto sells for P50 per pound. Management generally processes each of these chemicals further in
separable processes to produce more refined chemical products. Resoline is processed separately at a cost
of P5 per pound. The resulting product, Resolite, sells for P35 per pound. Krypto is processed separately
at a cost of P15 per pound. The resulting product, Kryptite, sells at P95 per pound.

1. The joint cost of product Kryptite using the net realizable value method would be

2. The cost to produce each unit of Resolite is

3. Assume that Trisebentin Chemical Company’s management is considering an opportunity to

process Kryptite further into a new product called Omega. The separable processing will cost P40
per pound. Packaging costs for Omega are projected to be P6 per pound and the anticipated sales
price is P130 per pound. Should the company sell Kryptite or Omega?
Problem 7

Tritertin Inc produces joint products X and Y, together with by – product W. Product X is sold at
split – off point, but Y and W undergo additional processing. Production data pertaining to these
products for the year ended June 30, 2015 are as follows:
X Y W Total
Joint costs Variable P 88,000.00
Fixed P 148,000.00
Separable costs Variable P 120,000.00 P 3,000.00 P 123,000.00
Fixed P 90,000.00 P 2,000.00 P 92,000.00
Production in pounds 50,000 40,000 10,000 100,000
Sales price per pound P 4.00 P 7.50 P 1.10

There are no beginning and ending inventories. No materials are spoiled in production. Joint costs are
allocated to joint products to achieve the same gross profit percentage for each joint product. Net revenue
from by – product W is deducted from production costs of the main products.

1. Determine the joint cost share of Product Y.

2. The cost to produce each unit of Product X is

Problem 8

Mohler Corporation manufactures a product that yields the byproduct, Jep. The only costs
associated with Jep are selling costs of $0.10 for each unit sold. Mohler accounts for sales of Jep by
deducting Jep’s separable costs from Jep’s sales and then deducting this net amount from the major
product’s cost of goods sold. Jep’s sales were 200,000 units at $1.00 each. If Mohler changes its method
of accounting for Jep’s sales of showing the net amount as additional sales revenue, the Mohler’s gross
margin would
a. increase by $180,000.
b. increase by $200,000.
c. increase by $220,000.
d. be unaffected.

Problem 9

HBD Co. buys Article RS for P5.6 per unit. At the end of processing in Dept. 1 Article RS split into
products J, K and L. Product J is sold at split-off point with no further processing, K and L require further
processing before they can be sold; K is processed in Dept. 2; and L is processed in Dept. 3. The following
is a summary of costs and other related data for the year ended July 31, 2014:

Dept. 1 Dept. 2 Dept. 3

Cost of Article RS
Direct Materials 10,080,000 105,000 1,020,000
Direct Labor 1,470,000 4,323,000 4,860,000
Factory Overhead 1,050,000 2,205,000 5,145,000

Product J Product K Product L

Unit sold 750,000 1,125,000 1,687,500
Units on hand at July 31, 2014 375,000 112,500 562,500
Sales 3,150,000 10,080,000 14,883,750

Cases
A. Use physical measure
B. Use net realizable value method

1. The cost to produce each unit of Product L is

2. The cost of Product J sold for the year ended July 31, 2014 is
3. The cost of ending inventory for Product K on July 31, 2014 is