MA41 Problem: Joint Costing – Mirza Inc.

MA41 Problem: Joint Costing – Mirza Inc.

Mirza Confectioners, Inc., makes a candy bar called Rey, which sells for $50 per kilogram. Themanufacturing process also yields a product known as Nagu. Without further processing, Nagu sells for $0.10 per kg. With further processing, Nagu sells for $0.30 per kg. During the month of April, total jointmanufacturing costs up to the point of separation consisted of the following charges to work-in-processinventory:Direct materials $150,000Direct labour 120,000Factory overhead 30,000Production for the month aggregated 394,000 kg. of Rey and 30,000 kg. of Nagu. To complete Naguduring the month of April and obtain a selling price of $0.30 per kg., further processing of Nagu duringApril would entail the following additional costs:Direct materials $2,000Direct labour 1,500Factory overhead 500

 Required – 

Prepare the April journal entries for Nagu, if Nagu is:a. Transferred as a by-product at sales value to the warehouse without further processing, with acorresponding reduction of Rey's manufacturing costs. b Further processed as a by-product and transferred to the warehouse at net realizable value, with acorresponding reduction of Rey's manufacturing costs.c Further processed and transferred to finished goods inventory, with joint costs being allocated between Rey and Nagu on the basis of their net realizable value.