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Miranda, Sweet (Joint Products)
Miranda, Sweet (Joint Products)
Miranda, Sweet (Joint Products)
III-BSBA- A
Chapter VI: Process Cost Accounting – Additional Procedure: Accounting for Joint Products and
By - Products
Exercise:
Normal Losses 1) Are expected in the manufacturing process and cannot be avoided.
Product Costs 2) These normal losses are treated.
Abnormal Losses 3) Such as those caused by machine breakdowns due to inadequate
maintenance and machine operator errors.
First-in First-out Method 4) This procedure assumes that the unit costs calculated for the current
period are used for a variety of reasons.
Joint Products 5) The several items obtained from a common process are divided into
two categories: those that are the primary objectives of the process.
Relative Sales Value 6) The assignment of costs in proportion to the
Adjusted Sales Value 7) Used that takes into consideration the cost of the processing after split
Split-off Joint 8) The point where these joint products become separately identifiable is
known
Joint Costs 9) The costs of materials, labor, and overhead incurred during such a
joint production process are called
Accounting for By-Products10) The common practice is to make no allocation of the processing costs up
to the split-off point
Problems:
1. Beginning inventory was 4,000 units, one-fourth complete as to labor and factory overhead. During the
period, 30,000 units were started in process and 28,000 units were finished. There were 6,000 units in
ending work in process, one-half complete as to labor and factory overhead. Assuming that the average
costing method is used and that all materials are put into production at the beginning of the process, while
labor and overhead are applied evenly throughout production, the equivalent units of production for direct
materials and for direct labor and factory overhead would be___________ and __________, respectively.
Answer:
Equivalent units of production for direct materials:
Units finished and transferred out 28,000
Units ending inventory, 100% complete 6,000
Equivalent units of production 34,000
2. Fraternity Row, Inc., makes one main product, Gamma, and a by-product,
Sigma. The estimated sales value of the units of Sigma produced during the
month is $5,000. Assuming that the value of the by-product is treated as a
reduction in cost of the main product, prepare the journal entries to record
the placing of Sigma in stock and the subsequent sale of Sigma for $4,000,
on account.
Answer:
Equivalent units of production for direct materials:
To complete beginning work in process
Added to units started and finished during month 24,000
Units ending inventory, 100% complete 6,000
Equivalent units of production 30,000
3. Fraternity Row, Inc., makes one main product, Gamma, and a by-product, Sigma. The estimated sales
value of the units of Sigma produced during the month is $5,000. Assuming that the value of the by-
product is treated as a reduction in cost of the main product, prepare the journal entries to record the
placing of Sigma in stock and the subsequent sale of Sigma for $4,000, on account.
Answer:
By – Product Inventory 5,000
Work in Process 5,000
Account Receivable 4,000
Gain and Loss on Sale of By – Product 1,000
By – Product Inventory 5,000
4. Fraternity Row, Inc., makes one main product, Gamma, and a by-product, Sigma. The estimated sales
value of the units of Sigma produced during the month is $5,000. Assuming that the value of the by-
product is treated as a reduction in cost of the main product, prepare the journal entries to record the
placing of Sigma in stock and the subsequent sale of Sigma for $4,000, on account.
Answer:
By – Product Inventory 5,000
Work in Process 5,000
Account Receivable 4,000
Gain and Loss on Sale of By – Product 1,000
By – Product Inventory 5,000
5. Beginning inventory was 4,000 units, one-fourth complete as to labor and factory overhead. During the
period, 30,000 units were started in process and 28,000 units were finished. There were 6,000 units in
ending work in process, one-half complete as to labor and factory overhead. Assuming that the average
costing method is used and that all materials are put into production at the beginning of the process, while
labor and overhead are applied evenly throughout production, the equivalent units of production for direct
materials and for direct labor and factory overhead would be ___________ and __________, respectively.
Answer:
Equivalent units of production for direct materials:
Units finished and transferred out 28,000
Units ending inventory, 100% complete 6,000
Equivalent units of production 34,000