MANAGERIAL AND COST ACCOUNTING MATZ, USRY AND HAMMER 9 th EDITION CHAPTER 6 - COSTING BY-PRODUCTS AND JOINT PRODUCTS EXERCISE 1 REQUIRED
1)
Accounts Receivable Income from sales of by product ( By product sold without incurring additional cost 80,000 pounds for $ 0.36 per pound )
2)
Finished goods By product Work in process - Okay ( By product transferred to finished goods and reducing the main product cost by 80,000 pounds X $ 0.36 per pound )
3)
Work in process By product Payroll Applied Factory overhead Material ( Further processing of By product accounting for material, labour and factory overhead after separation ) Finished goods By product Work in process By product ( By product transferred to finished goods after processing )
4)
Work in process By product Work in process Okay (see working below) Payroll Applied Factory overhead Material ( Further processing of By product accounting for materail, labour and factory overhead and allocation of joint cost by the market value method ) Finished goods
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By product Work in process By product ( By product transferred to finished goods after processing )
WORKING FOR JOURNAL ENTRY 4 Product
Okay By product
Units
315,000 80,000
%age to allocate cost prior to separation = ($ 250,000+$200,000+$170,000) 250,000+$200,000+$170,000) / $ 658,800
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Subsidiary Ledger Debit / (Credit) $
General Ledger Debit $
Credit $
28,800 28,800
28,800 28800 28,800
20,000 6,000 4,000 10,000
20,000 20,000 20,000
47,104 27,104 6,000 4,000
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47,104
Per unit market Total market value at point of value at point of separation separation $ $ 2.00 630,000 0.36 28,800 658,800 $ 620,000 / $ 658,800 =
47,104
Allocation of cost prior to separation $ 592,896 27,104 620,000 94.1105%
