Page 493 - F2 - MA Integrated Workbook STUDENT 2018-19

Answers

Example 6

Clare plc produces two products, X and Y, in a single joint process.

Last month the joint costs were $50,000.

5,000 units of Product X and 7,500 units of Product Y were produced.

Additional processing costs were $10,000 for Product X and $5,000 for
Product Y.

Product X sells for $15, and Product Y sells for $8.

The Market value method of apportioning joint costs:

Calculate the total market value:

X: 5,000 × $15 = $75,000

Y: 7,500 × $8 = $60,000

Total market value = $135,000

Calculate the joint cost allocation:

X: $50,000 ÷ 135,000 × $75,000 = $27,778

Y: $50,000 ÷ 135,000 × $60,000 = $22,222

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