c
and d
The estimated net realisable value of the byproduct is deducted from the production costs prior to allocation to the joint products, as presented below Allocation of Cutting Department costs to joint products and byproducts Net realisable value
(NRV) of byproduct
= Byproduct revenue − Separable costs
= €0.10 (270,000 × 10%) − €700
=
€2,700
− €700
=
€2,000 Costs to be allocated
= Joint costs − NRV of byproduct
=
€60,000
− €2,000
=
€58,000
Product Revenue Separable Costs Joint Costs Gross Margin Slices Sauce Juice
€71,280 44,550 27,000
€142,830
€11,280 8,550 3,000
€22,830
€29,000 17,400 11,600
€58,000
€31,000 18,600 12,400
€62,000
2
The gross-margin euro information by main product is determined by the arbitrary allocation of joint production costs. As a result, these cost figures and the resulting gross-margin information are of little significance for planning and control purposes. The allocation is made only for purposes of stock costing and income determination.
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Share with your friends: |
