Summary of the chapter

Joint Products:
Joint products represent the products separated in the course of same processing operation.
Each product usually requires processing & every product has such relative value which no
other product can be assigned

Joint Product Cost:

The cost that is arises from the common manufacturing of the
products, using raw materials.

By Products:
A by-product as compared is relatively minor in terms of total value and
is derived to the manufacture of major products.

METHODS OF COSTING:
1. Revenue from the sale of by-product
a) A deduction from the cost of good sold of the product
b) Additional sales revenue.
2. Replacement method cost
3. Market value method
 Question: (1)
The Manhattan Company produces three joint products, A, B
and C. Total joint production cost for October was $ 21,900
The units produced and the unit sales are as follows in the
table below:

PRODUCTS UNITS UNIT SALE PRICE

A 5,000 $2.20
B 7,000 $1.24
C 9,000 $1.29

REQUIRED: Allocation of the production cost using the market

value method.

 SOLUTION :

JOINT NO. OF MARKET TOTAL APPORTIONAMENT

PRODUCT UNITS VALUE MARKET OF THE JOINT
PRODUCED PER UNIT VALUE PRODUCTION COST
A 5,000 $2.20 $11,000
B 7,000 $1.24 $8,680
C 9,000 $1.29 $11,610