Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
6.12 Estimated net realisable value method. (10 min) A diagram of the situation is in Solution Exhibit 6.12 (all numbers are in thousands.
Cooking oil Soap oil Total Expected final
sales value of production CO, 1,000
× NKr 50; SO, 500 × NKr 25
NKr 50,000
NKr 12,500
NKr 62,500
Deduct expected separable
costs to complete and sell 30,000 7,500 37,500
Estimated net realisable
value at split-off point NKr 20,000
NKr 5,000 NKr
25,000
Weighting NKr 20,000
÷ NKr 25,000 = 0.8
NKr 5,000 ÷ NKr
25,000 = 0.2
Joint costs allocated,
CO, 0.8 × NKr 24,000; SO, 0.2 × NKr
24,000
NKr 19,200
NKr 4,800
NKr 24,000
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