Chapter 11

Problem 1: Owen Company

1. Market value method

Products Units MV at split- Total MV at Share in Joint
Produced off split-off Cost
A 20,000 P4.00 P80,000 P112,000
B 32,000 1.75 56,000 78,400
C 36,000 3.00 108,000 151,200
D 24,000 2.75 66,000 92,400
P310,000 P 434,000
Percentage = P434,000/310,000=140%
A= P80,000 x140% = 112,000
or
A =80/310x P434,000 = P112,000
B =56/310 x 434,000 = 78,400
C = 108/310 x 434,000 = 151,200
D =66/310 x 434,000 = 92,400

2. Average unit cost method

Products Units Average unit cost Share in Joint Cost
Produced
A 20,000 3.875 P77,500
B 32,000 124,000
C 36,000 139,500
D 24,000 93,000
112,000 434,000

Average unit cost = P434,000/112,000= 3.875

A= 20,000 x 3.875 = 77,500
or
A=20/112 x P434,000 = 77,500
B =32/112 x 434,000 = 124,000
C = 36/112 x 434,000 = 139,500
D= 24/112 x 434000 = 93,000

3. Weighted average method

Products Units Weight Total weight Cost per Share in Joint
Produced Factor Factor Weight Cost
Factor
A 20,000 3.0 60,000 .775 46,500
B 32,000 5.5 176,000 136,400
C 36,000 5.0 180,000 139,500
D 24,000 6.0 144,000 111,600
560,000 434,000

Cost per weight factor = P434,000/560,000 = .775

A=60,000 x.775 = P46,500
or
A= 60/560 x P434,000 = 46,500
B = 176/560 x 434,000 =P136,400
C = 180/560 x 434,000= P139,500
D = 144/560 x 434,000 = P111,600

Problem 2 Meadows Company

1. Sales vale at split off
Products Sales Value at split Percentage Share in Joint
off Cost
A P 88,000 120% P 105,600
B 77,000 92,400
C 55,000 66,000
P 220,000 P 264,000
Percentage = P264,000/220,000 = 120%
A= P88,000 x 120% = P105,600
or
A = 88/220 x P264,000 = P105,600
B = 77/220 x P264,000 = 92,400
C = 55/220 x P264,000 = 66,000

2. Physical units method

Products Units Produced Average unit Share in Joint
cost Cost
A 13,200 P10 P132,000
B 8,800 10 88,000
C 4,400 10 44,000
26,400 P264,000
Average unit cost = P264,000/26,400 = P10
A= 13,200 units X P10 =P 132,000
or
A = 13,200/26,400 x P264,000 = P132,000
B = 8,800/26,400 X 264,000= 88,000
C = 4,400/26,400 x 264,000= 88,000

3. Approximated market value

Product Units Total Additiona Cost to Net Share
s Produce Market l Cost sell Realizabl in Joint
d Value e Value Cost
A 13,200 121,00 26,000 3,160 91,840 105,60
0 0
B 8,800 97,760 15,400 2,000 80,360 92,400
C 4,400 69,600 11,000 1,200 57,400 66,000
26,400 288,36 52,400 6,360 229,600 264,00
0 0
A = 91,840/229,600 x 264,000 = 105,600
B = 80,360/229,600 x 264,000 = 92,400
C = 57,400/229,600 x 264,000 = 66,000
Problem 3 Anchor Company
1. Market value method
Products Units Sales Value Percentage Share in Additional Total
Produced at split-off Joint Cost Processing Production
Cost Costs
A 62,500 P525,000 60% P315,000 110,000 P425,000
B 50,000 337,500 202,500 37,500 240,000
C 12,500 75,000 45,000 15,000 60,000
125,000 P937,500 P562,500 162,500 P725,000
Percentage = 562,500/937,500 = 60%
A = 525,000 x 60% = P315,000
or
A =525,000/937,500 x P562,500 =P315,000
B = 337,500/937,500 x 562,500 = 202,500
C = 75,000/937,000 x P562,500 = 45,000

2. Average unit cost

Products Units Produced Average unit Share in Joint Additional Cost Total Cost
cost Cost
A 62,500 P4.50 P281,250 110,000 P 391,250
B 50,000 225,000 37,500 262,500
C 12,500 56,250 15,000 71,250
125,000 P562,500 162,500 P 725,000
Average unit cost= Joint cost/units produced
=P562,500/125,000
=P4.50
A= 62,500 units x P4.50= P81,250
or
A =62,500/125,000 x P562,500 = P281,250
B= 50,000/125,000 x P562,500 = 225,000
C = 12,500/125,000 x P562,500 = 56,250

Problem 5 Fisher Company

1. Share of the by-products in the joint cost using reversal method
By-product A By-product B
Sales P6,000 P3,500
Less:
Manufacturing cost after separation P1,100 P900
Marketing and administrative 750 500
expense
Desired profit 900 2,750 420 1,820
Share in joint cost P3,250 P 1,680
2. Income Statement
Fisher Company
Income Statement
For the month ended April 30, 2023
Main By-product By product Total
Product A B
Sales P75,000 6,000 3,500
Less: Cost of goods sold
Share in joint cost 32,750 3,250 1,680
Cost after separation (Subsequent cost) 11,500 1,100 900
44,070 4,350 2,580
Gross profit 30,930 1,650 920
Less: Marketing and administrative 6,000 750 500
Net income P24,930 900 420

Share of main product in joint cost = P37,500-3,250-1,680= P32,750

Multiple Choice
1. B P16,500
Bex Rom
Sales (1,600 x P50) P 80,000 (800 x P100) P80,000
Less: Additional processing cost 25,000 35,000
Net realizable value 55,000 45,000
Allocation:
Bex = 55/100 x P30,000= P16,500
Rom =45/100 x P30,000= P13,500

2. D P168,000
Joint costs P262,000
Less: Sales value of Z 10,000
Balance P252,000

C Sales value at split off Share in joint cost

X P300,000 P168,000
Y 150,000 84,000
P450,000 P252,000

Allocation:
X =300/450 x P252,000 = P168,000
Y =150/450 x P252,000 = 84,000

3. C P26,667
Product Market value if Share in joint cost
Processed Further
K P40,000 P26,667
 W 35,000 23,333
P75,000 P50,000
Allocation: K = 40/75 x P50,000= 26,667 W=35/100 x P50,000= 23,333
4. D
5. B (100,000 x P1) = P100,000
6. B P15,000
Sales value at split off -J P 15,000/25,000 = 60%
K 10,000
P 25,000

Total joint cost = P9,000/60%

= P15,000
7. C P4
Sales value if process further P32,000
Less: Sales value at split off 24,000
Increase in sales 8,000
Divide 2,000 units
Increase in SP P 4

8. X only
X Y Z
Final sales value P 17,000 P4,000 P8,000
Less: Separable costs 9,000 7,000 8,000
Income (Loss) P 8,000 (3,000) 0

9. C P37,000 (P40,000 – P3,000)