Cost Accounting Questions
Alrayes
Eldenburg_Wolcott_Wk11_ch09.ppt© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 1
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 9
JOINT PRODUCT AND BY-PRODUCT COSTING
© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Chapter 9: Joint Product and By-Product Costing
Learning objectives
Q1: What is a joint process, and what is the difference between a by-product and a main product?
Q2: How are joint costs allocated?
Q3: What factors are considered in choosing a joint cost allocation method?
Q4: What information is relevant for deciding whether to process a joint product beyond the split-off point?
Q5: What methods are used to account for the sale of by-products?
Q6: How does a sales mix affect joint cost allocation?
Q7: How do joint cost allocations affect decisions and managerial incentives?
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Joint Processes and Costs
Joint products that have minimal sales value compared to the main product are called by-products.
A process that yields one or more products is called a joint process.
The products are called joint products.
The costs of the process are called joint costs.
The split-off point is the stage in the joint process where the separate products become identifiable.
Joints costs are incurred prior to the split-off point.
Costs incurred past split-off are separable costs.
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The first click brings in the second bullet and its two secondary bullets are automated.
The 2nd click brings in the third bullet, and the 3rd and 4th clicks bring in its two secondary bullets.
The 5th click brings in the 3rd primary bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q1: Joint Processes and Costs
Sawdust
Bark
Planks
Joint costs include DM, DL & Overhead.
Joint products
Wall paneling
The costs of processing planks further are separable costs.
If sawdust sells for a relatively minimal amount, it is a byproduct.
The beginning of this slide is automated.
The first click brings in the red oval and text about joint costs, which disappears on the next mouse click.
The second click brings in the green oval and text about joint products, which disappears on the next mouse click.
The third click brings in the dark blue arrow and text about byproducts, which disappears on the next mouse click.
The fourth click brings in the arrow and wall paneling elements, and the blue oval and text about separable costs are automated.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q2: Methods of Allocating Joint Costs
Physical output methods
Can be used only when joint products are measured the same way (e.g. pounds or feet).
Market-based methods
Sales value at split-off method
Often used when all products sold at split-off.
Net realizable value (NRV) method
NRV = Final selling price – Separable costs.
Constant gross margin (GM) NRV method
The two NRV methods can be used when some products are processed past split-off.
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One click is required for each remaining bullet and sub-bullet, including the first one.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 6
Q2: Physical Volume Method Example
Pleasing Peaches grows peaches and processes three different peach products that are sold to a canning company. The pounds produced for each product, and the selling price per pound, is given below. The joint costs of processing the 280,000 pounds of products were $70,000. Allocate the joint costs to each product using the physical volume method.
The given information and the solution template are automated. The solutions do not appear until you click once.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 7
Q2: Sales Value at Split-Off Method Example
Allocate the joint costs of $70,000 to each of Pleasing Peaches products using the sales value at split-off method.
The given information and the solution template are automated. The solutions do not appear until you click once.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2, 6: Compare the Physical Volume and Sales Value at Split-Off Methods
Compute the gross margin for each product for each of the two allocation methods. Discuss the differences between the two methods.
The given information and the solution template are automated. The solutions do not appear until you click once.
No solutions are provided for the “discuss the differences” portion of the question as it is meant to stimulate discussion.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 9
Q2, 6: Compare the Physical Volume and Sales Value at Split-Off Methods
Compute the gross margin ratio (GM/Sales) for each product under both of the methods and discuss.
The given information and the solution template are automated. The solutions do not appear until you click once.
No solutions are provided for the “discuss” portion of the question; students can clearly see the 43.5% for all products under the sales value at split off method.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 10
Q2: Net Realizable Value (NRV) Method Example
Pleasing Peaches could process each of its three products beyond split off. It could can the peach halves itself, make the peach slices into frozen peach pie, and make juice out of the peach purée. The retail value of the new products and the separable costs for the additional processing are given below. Compute the joint costs allocated to each of the products using the NRV method.
The given information and the solution template are automated. The solutions do not appear until you click once.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q2: Constant GM NRV Method
Under the constant GM NRV method, all products are allocated joint costs to achieve the same gross margin ratio (GM%).
First compute overall gross margin and GM%:
GM = Revenue – Joint costs – Separable costs
GM% = GM/Sales
All products end up with the same gross margin ratio; for each product solve for allocated joint costs:
Final sales value – joint costs – separable costs = GM
Then compute the GM for each product:
GM = Final sales value x GM%
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One click is required for each of the remaining three bullets.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 12
Q2: Constant GM NRV Method Example
Compute the joint costs that Pleasing Peaches would allocate to each of the products using the constant GM NRV method.
First compute the overall GM and GM ratio:
GM = $350,000 - $163,000 - $70,000 = $117,000
GM% = $117,000/$350,000 = 33.43%
Values are rounded as appropriate.
The given information and the solution template are automated.
The first click brings in the “first compute the GM…” text, which disappears after the next mouse click.
The second click brings in the computation of GM and GM%.
The third click brings in the joint cost allocation solutions.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 13
Q2, 6: Compare the NRV and Constant GM NRV Methods
Compute the gross margin (GM) and the gross margin ratio (GM%) for each product under NRV method. Compare this to the results of the constant GM NRV method and discuss.
Values are rounded as appropriate.
The given information and the solution template are automated. The solutions do not appear until you click once.
No solutions are provided for the “discuss” portion of the question.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q3: Choosing a Joint Cost Allocation Method
Allocated joint costs should not be used in decision making.
Still, avoid a method that shows one product to be unprofitable.
Under the physical volume method, the product with the greatest relative physical volume is allocated the most joint costs, regardless of product’s sales value.
Both of the NRV methods allocate joint costs based on the products’ “ability to bear the cost”.
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One click is required for each remaining bullet and sub-bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 15
Q4: Sell or Process Further Decisions
Companies often can choose to sell a product at the split-off point or to process it further.
Compare the incremental revenue of processing further to the product’s separable costs.
Incremental revenue of processing further = Final sales value – Sales value at split-off
Process further only when the incremental revenue exceeds the separable costs.
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One click is required for each remaining bullet and sub-bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 16
Q4: Sell or Process Further Example
Peg’s Plastic Products makes the molded plastic parts for three model car kits, A, B & C from a joint production process. The joint costs of this process are $150,000. In each case, Peg could decide to make the entire kit rather than just the plastic parts. Information about the sales values and separable costs for each kit is given below. Determine which kits Peg should sell at the split-off point and which she should process further.
The given information and the solution template are automated.
The solutions appear on the first click.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q5: Accounting for By-Products
When by-products have no sales value, there is no reason to account for them.
Otherwise, there are two accounting methods available:
Recognize by-product value at time of production
Recognize by-product value at time of by-product sale
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One click is required for each of remaining bullet & sub-bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q5: Recognize By-Product Value at Time of Production
This method is also known as the offset approach or the NRV approach.
Joint cost of the main products is reduced by the NRV of the by-products, even if by-products are not yet sold.
NRV of the by-products is kept in ending inventory until sold.
At sale of by-product, ending inventory is reduced; there is no gain/loss on sale.
This method allows managers to control by-products.
The first bullet is automated.
One click is required for each of remaining bullet & sub-bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 19
Q5: By-Product Value Recognized at Time of Production Example
SJ Enterprises produces a main product and one by-product in a joint process. The joint costs totaled $480,000. The main product sells for $10/unit and the by-product sells for $1/unit. Information about the production and sales of the 2 products is given below. Use the NRV method to compute the production cost per unit for the main product.
The given information and the solution template are automated.
The solutions appear on the first click.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 20
Q5: By-Product Value Recognized at Time of Production Example
Prepare an income statement for SJ Enterprises and compute the costs attached to ending inventory using the NRV method, assuming that non-manufacturing costs totaled $250,000.
The given information and the solution template for the income statement are automated.
The income statement solutions appear on the first click, and then the solution template for ending inventory is automated.
The second click brings in the solutions for the ending inventory computation.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q5: Recognize By-Product Value at Time of Sale
This method is also known as the Realized Value Approach or the RV Approach.
Joint cost of the main products is not reduced by the NRV of the by-products, regardless if by-products are sold.
NRV of the by-products is not kept in ending inventory.
At sale of by-product, either Other Income is recorded or Cost of Goods Sold is reduced.
The first bullet is automated.
One click is required for each of remaining bullet & sub-bullet.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 22
Q5: By-Product Value Recognized at Time of Sale Example
SJ Enterprises produces a main product and one by-product in a joint process. The joint costs totaled $480,000. The main product sells for $10/unit and the by-product sells for $1/unit. Information about the production and sales of the 2 products is given below. Use the RV method to compute the production cost per unit for the main product.
The given information and the solution template are automated.
The solutions appear on the first click.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 23
Q5: By-Product Value Recognized at Time of Sale Example
Prepare an income statement for SJ Enterprises and compute the costs attached to ending inventory using the RV method, assuming that non-manufacturing costs totaled $250,000. By-product sales is recorded as other income.
The given information and the solution template for the income statement are automated.
The income statement solutions appear on the first click, and then the solution template for ending inventory is automated.
The second click brings in the solutions for the ending inventory computation.
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© John Wiley & Sons, 2011
Chapter 9: Joint Product and By-Product Costing
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 24
Q7: Decision Making & Joint Cost
Joint cost information is required for financial statement & tax return preparation when production does not equal sales (inventory and cost of goods sold).
Allocated joint costs are irrelevant for most decisions, especially regarding individual products
Joint cost information should not be used to make product mix decisions.
The first bullet is automated.
The first click brings in the second bullet.
The second click brings in the third bullet.
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Product
Pounds
Produced
Selling
Price per
Pound
Total Sales
Value at
Split-Off
Relative
Weight
Allocated
Joint Costs
Peach halves160,000$0.50$80,00057.1%$40,000
Peach slices80,000$0.40$32,00028.6%$20,000
Peach purée40,000$0.30$12,00014.3%$10,000
280,000$124,000100.0%$70,000
Product
Pounds
Produced
Selling
Price per
Pound
Total Sales
Value at
Split-Off
Relative
Weight
Allocated
Joint Costs
Peach halves160,000$0.50$80,00057.1%$40,000
Peach slices80,000$0.40$32,00028.6%$20,000
Peach purée40,000$0.30$12,00014.3%$10,000
280,000$124,000100.0%$70,000
Joint cost example
| joint costs | 70000 | ||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | |||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | |||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | |||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | |||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | ||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | ||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | ||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | ||||||||||||
| $124,000 | 100.0% | $0 | |||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | ||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | ||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | ||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | ||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | |||||||||||
| Stir-fry | Soy milk | Soy oil | Total | ||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | |||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | |||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | |||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | |||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | |||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | |||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | ||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | ||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | ||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | ||||||||||||
| $124,000 | 100.0% | $0 | |||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | ||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | ||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | ||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | ||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | |||||||||||
| Stir-fry | Soy milk | Soy oil | Total | ||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | |||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | |||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Pounds
Produced
Selling
Price per
Pound
Total Sales
Value at
Split-Off
Relative
Sales
Value
Allocated
Joint Costs
Peach halves160,000$0.50$80,00064.5%$45,161
Peach slices80,000$0.40$32,00025.8%$18,065
Peach purée40,000$0.30$12,0009.7%$6,774
280,000$124,000100.0%$70,000
Product
Pounds
Produced
Selling
Price per
Pound
Total Sales
Value at
Split-Off
Relative
Sales
Value
Allocated
Joint Costs
Peach halves160,000$0.50$80,00064.5%$45,161
Peach slices80,000$0.40$32,00025.8%$18,065
Peach purée40,000$0.30$12,0009.7%$6,774
280,000$124,000100.0%$70,000
Joint cost example
| joint costs | 70000 | ||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | |||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | |||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | |||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | |||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | ||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | ||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | ||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | ||||||||||||
| $124,000 | 100.0% | $0 | |||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | ||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | ||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | ||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | ||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | |||||||||||
| Stir-fry | Soy milk | Soy oil | Total | ||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | |||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | |||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | |||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | |||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | |||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | |||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | ||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | ||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | ||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | ||||||||||||
| $124,000 | 100.0% | $0 | |||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | ||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | ||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | ||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | ||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | |||||||||||
| Stir-fry | Soy milk | Soy oil | Total | ||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | |||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | |||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Total
Sales
Value at
Split-Off
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Peach halves$80,000$40,000$45,161$40,000$34,839
Peach slices$32,000$20,000$18,065$12,000$13,935
Peach purée$12,000$10,000$6,774$2,000$5,226
$124,000$70,000$70,000
$54,000
$54,000
Allocated Joint
CostsGross Margin
Product
Total
Sales
Value at
Split-Off
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Peach halves$80,000$40,000$45,161$40,000$34,839
Peach slices$32,000$20,000$18,065$12,000$13,935
Peach purée$12,000$10,000$6,774$2,000$5,226
$124,000$70,000$70,000
$54,000
$54,000
Allocated Joint
CostsGross Margin
Joint cost example
| joint costs | 70000 | |||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | ||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | ||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | ||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | ||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | |||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | |||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | |||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | |||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | |||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||||||||||
| Allocated Joint Costs | Gross Margin | |||||||||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||||||||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | |||||||||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | |||||||||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | |||||||||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | |||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | |||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | |||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | |||||||||||||
| $124,000 | 100.0% | $0 | ||||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | |||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | |||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | |||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | |||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | ||||||||||||
| Stir-fry | Soy milk | Soy oil | Total | |||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | ||||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | ||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | ||||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | ||||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | |||||||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | Product | Separable Costs | Final Sales Value | ||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | Stir-fry | $50,000 | $220,000 | ||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | Soy milk | $40,000 | $180,000 | ||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | Soy oil | $60,000 | $190,000 | ||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | $150,000 | $590,000 | |||||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | |||||||||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | |||||||||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | |||||||||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | |||||||||||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||||||||||
| Allocated Joint Costs | Gross Margin | |||||||||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||||||||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | |||||||||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | |||||||||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | |||||||||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | ||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | |||||||||||||
| Bean sprouts | $80,000 | 64.5% | $0 | |||||||||||||
| Bean curd | $32,000 | 25.8% | $0 | |||||||||||||
| Soy nuts | $12,000 | 9.7% | $0 | |||||||||||||
| $124,000 | 100.0% | $0 | ||||||||||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation | |||||||||||
| Stir-fry | $220,000 | $50,000 | $170,000 | 38.6% | $0 | |||||||||||
| Soy milk | $180,000 | $40,000 | $140,000 | 31.8% | $0 | |||||||||||
| Soy oil | $190,000 | $60,000 | $130,000 | 29.5% | $0 | |||||||||||
| $590,000 | $150,000 | $440,000 | 100.0% | $0 | ||||||||||||
| Stir-fry | Soy milk | Soy oil | Total | |||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | ||||||||||||
| Less: Joint costs | ($5,932) | ($5,763) | $11,695 | $0 | ||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | ||||||||||||
| Gross margin | $164,068 | $134,237 | $141,695 | $440,000 | ||||||||||||
| Gross margin % | 74.576% | 74.576% | 74.576% | 74.576% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Total
Sales
Value at
Split-Off
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Peach halves$80,000$40,000$34,83950.0%43.5%
Peach slices$32,000$12,000$13,93537.5%43.5%
Peach purée$12,000$2,000$5,22616.7%43.5%
$124,000
$54,000
$54,000
43.5%
43.5%
Gross MarginGross Margin Ratio
Product
Total
Sales
Value at
Split-Off
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Physical
Volume
Method
Sales
Value at
Split-Off
Method
Peach halves$80,000$40,000$34,83950.0%43.5%
Peach slices$32,000$12,000$13,93537.5%43.5%
Peach purée$12,000$2,000$5,22616.7%43.5%
$124,000
$54,000
$54,000
43.5%
43.5%
Gross MarginGross Margin Ratio
Joint cost example
| joint costs | 70000 | |||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | |||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | |||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | |||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | |||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | |||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | |||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | |||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | |||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||
| Allocated Joint Costs | Gross Margin | |||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | |||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | |||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | |||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | ||||
| Gross Margin | Gross Margin Ratio | |||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | |||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | |||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | |||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | ||||
| Allocated Joint Costs | Gross Margin | |||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Sales Value at Split-Off Method | |||
| Canned peaches | $80,000 | $18,065 | $13,935 | $61,935 | $66,065 | |||
| Peach pie | $32,000 | $6,774 | $5,226 | $25,226 | $26,774 | |||
| Peach juice | $12,000 | $70,000 | $54,000 | -$58,000 | -$42,000 | |||
| $124,000 | $94,839 | $73,161 | $29,161 | $50,839 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | |||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | |||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | |||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | |||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | |||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | |||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | |||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | |||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | |||
| 280,000 | $124,000 | 100.0% | $70,000 | |||||
| Allocated Joint Costs | Gross Margin | |||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | |||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | |||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | |||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | ||||
| Gross Margin | Gross Margin Ratio | |||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | |||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | |||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | |||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | |||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | ||||
| Allocated Joint Costs | Gross Margin | |||||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Sales Value at Split-Off Method | |||
| Canned peaches | $80,000 | $18,065 | $13,935 | $61,935 | $66,065 | |||
| Peach pie | $32,000 | $6,774 | $5,226 | $25,226 | $26,774 | |||
| Peach juice | $12,000 | $70,000 | $54,000 | -$58,000 | -$42,000 | |||
| $124,000 | $94,839 | $73,161 | $29,161 | $50,839 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Final
Sales
Value
Separable
CostsNRV
Relative
NRV
Allocated
Joint
Costs
Canned peaches$180,000 $60,000 $120,000 64.2%$44,920
Peach pie$120,000 $70,000 $50,000 26.7%$18,717
Peach juice$50,000 $33,000 $17,000 9.1%$6,364
$350,000 $163,000 $187,000
100.0%
$70,000
Product
Final
Sales
Value
Separable
CostsNRV
Relative
NRV
Allocated
Joint
Costs
Canned peaches$180,000 $60,000 $120,000 64.2%$44,920
Peach pie$120,000 $70,000 $50,000 26.7%$18,717
Peach juice$50,000 $33,000 $17,000 9.1%$6,364
$350,000 $163,000 $187,000
100.0%
$70,000
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Final
Sales
Value
Separable
Costs
Allocated
Joint
Costs
Gross
Margin
Gross
Margin
Ratio
Canned peaches$180,000 $60,000 $59,829 $60,171 33.4%
Peach pie$120,000 $70,000 $9,886 $40,114 33.4%
Peach juice$50,000 $33,000 $286 $16,714 33.4%
$350,000 $163,000 $70,000 $117,000
Product
Final
Sales
Value
Separable
Costs
Allocated
Joint
Costs
Gross
Margin
Gross
Margin
Ratio
Canned peaches$180,000 $60,000 $59,829 $60,171 33.4%
Peach pie$120,000 $70,000 $9,886 $40,114 33.4%
Peach juice$50,000 $33,000 $286 $16,714 33.4%
$350,000 $163,000 $70,000 $117,000
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Product
Final
Sales
Value
NRV
Method
Constant
GM NRV
Method
NRV
Method
Constant
GM NRV
Method
Peach halves$180,000$75,080$60,17141.7%33.4%
Peach slices$120,000$31,283$40,11426.1%33.4%
Peach purée$50,000$10,636$16,71421.3%33.4%
$350,000
$117,000
$117,000
33.4%
33.4%
Gross MarginGross Margin Ratio
Product
Final
Sales
Value
NRV
Method
Constant
GM NRV
Method
NRV
Method
Constant
GM NRV
Method
Peach halves$180,000$75,080$60,17141.7%33.4%
Peach slices$120,000$31,283$40,11426.1%33.4%
Peach purée$50,000$10,636$16,71421.3%33.4%
$350,000
$117,000
$117,000
33.4%
33.4%
Gross MarginGross Margin Ratio
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | ||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | ||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | ||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||
| Allocated Joint Costs | Gross Margin | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||
| overall GM% = | 33.4% | ||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||
| Gross Margin | Gross Margin Ratio | ||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | ||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | ||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | ||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Kit
Final
Sales
Value
Sales
Value at
Split-Off
Sep-
arable
Costs
Incre-
mental
Revenue
Incre-
mental
Profit if
Process
Further
Sell at
Split-Off
or
Process
Further?
A$200,000$180,000$25,000$20,000($5,000)Sell
B$120,000$60,000$40,000$60,000$20,000Process
C$80,000$40,000$10,000$40,000$30,000Process
Kit
Final
Sales
Value
Sales
Value at
Split-Off
Sep-
arable
Costs
Incre-
mental
Revenue
Incre-
mental
Profit if
Process
Further
Sell at
Split-Off
or
Process
Further?
A$200,000$180,000$25,000$20,000($5,000)Sell
B$120,000$60,000$40,000$60,000$20,000Process
C$80,000$40,000$10,000$40,000$30,000Process
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
demo process further
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Product | Separable Costs | Final Sales Value | Joint costs | 300000 | |||||||||
| Bean sprouts | 250,000 | $0.60 | $150,000 | Stir-fry | $50,000 | $220,000 | |||||||||||
| Bean curd | 150,000 | $0.80 | $120,000 | Soy milk | $40,000 | $180,000 | |||||||||||
| Soy nuts | 100,000 | $1.40 | $140,000 | Soy oil | $60,000 | $190,000 | |||||||||||
| 500,000 | $410,000 | $150,000 | $590,000 | ||||||||||||||
| Product | Pounds Produced | Relative Production | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | 250,000 | 50.0% | $150,000 | ||||||||||||||
| Bean curd | 150,000 | 30.0% | $90,000 | ||||||||||||||
| Soy nuts | 100,000 | 20.0% | $60,000 | ||||||||||||||
| 500,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Relative Sales Value at Split-Off | Joint Cost Allocation | ||||||||||||||
| Bean sprouts | $150,000 | 36.6% | $109,756 | ||||||||||||||
| Bean curd | $120,000 | 29.3% | $87,805 | ||||||||||||||
| Soy nuts | $140,000 | 34.1% | $102,439 | ||||||||||||||
| $410,000 | 100.0% | $300,000 | |||||||||||||||
| Product | Total Sales Value at Split-Off | Final Sales Value | Separable Costs | Incremental Revenue | Incremental Profit if Process Further | Process Further? | |||||||||||
| Bean sprouts/stir-fry | $150,000 | $220,000 | $50,000 | $70,000 | $20,000 | Yes | |||||||||||
| Bean curd/soy milk | $120,000 | $180,000 | $40,000 | $60,000 | $20,000 | Yes | |||||||||||
| Soy nuts/soy oil | $140,000 | $190,000 | $60,000 | $50,000 | ($10,000) | No | |||||||||||
| $410,000 | $590,000 | $150,000 | $180,000 | ||||||||||||||
| Bean sprouts/stir-fry | Bean curd/soy milk | Soy nuts/soy oil | Total | ||||||||||||||
| Total revenues | $220,000 | $180,000 | $190,000 | $590,000 | |||||||||||||
| Less: Joint costs | ($117,797) | ($97,288) | ($84,915) | ($300,000) | |||||||||||||
| Separable costs | ($50,000) | ($40,000) | ($60,000) | ($150,000) | |||||||||||||
| Gross margin | $52,203 | $42,712 | $45,085 | $140,000 | |||||||||||||
| Gross margin % | 23.729% | 23.729% | 23.729% | 23.729% |
PSA Ex1&2
| Joint cost | $1,000,000 | ||||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 | ||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | GM Under Physical Volume Method | GM% Under Physical Volume Method | ||||||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | ($10,000) | -4.167% | |||||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $268,333 | 47.917% | |||||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $1,081,667 | 70.238% | |||||
| 48,000 | $1,000,000 | $2,340,000 | $1,340,000 | ||||||||
| Gallons | Physical Volume Method Joint Cost Allocation | Selling Price per Gallon | Revenue at Split Off | Sales Value at Split-Off Method Joint Cost Allocation | GM Under Physical Volume Method | GM% Under Physical Volume Method | GM Under Sales Value at Split-Off Method | GM% Under Sales Value at Split-Off Method | |||
| Yuk | 12,000 | $250,000 | $20 | $240,000 | $102,564 | ($10,000) | -4.167% | $137,436 | 57.265% | ||
| Gluk | 14,000 | $291,667 | $40 | $560,000 | $239,316 | $268,333 | 47.917% | $320,684 | 57.265% | ||
| Muk | 22,000 | $458,333 | $70 | $1,540,000 | $658,120 | $1,081,667 | 70.238% | $881,880 | 57.265% | ||
| 48,000 | $1,000,000 | $2,340,000 | $1,000,000 | $1,340,000 | $1,340,000 |
PSA Ex3
| Joint cost | $300,000 | ||||||||
| Final Sales Value | Separable Costs | NRV | Relative NRV | Joint Cost Allocation Under NRV Method | GM Under NRV Method | GM% Under NRV Method | |||
| AA | $100,000 | $10,000 | $90,000 | 23.684% | $71,053 | $18,947 | 18.947% | ||
| BB | $180,000 | $40,000 | $140,000 | 36.842% | $110,526 | $29,474 | 16.374% | ||
| CC | $210,000 | $60,000 | $150,000 | 39.474% | $118,421 | $31,579 | 15.038% | ||
| $490,000 | $110,000 | $380,000 | 100.000% | $300,000 | $80,000 | ||||
| Final Sales Value | Separable Costs | GM% | GM | Joint Cost Allocation Under Constant GM NRV Method | |||||
| AA | $100,000 | $10,000 | 16.327% | $16,327 | $73,673 | ||||
| BB | $180,000 | $40,000 | 16.327% | $29,388 | $110,612 | ||||
| CC | $210,000 | $60,000 | 16.327% | $34,286 | $115,714 | ||||
| $490,000 | $110,000 | $80,000 | $300,000 |
PSA Ex4
| Product | Sales Value at Split-Off | Final Sales Value | Separable Costs | Incre-mental Revenue | Incre-mental Profit | ||
| W; WW | $320,000 | $420,000 | $40,000 | $100,000 | $60,000 | ||
| X; XX | $120,000 | $150,000 | $32,000 | $30,000 | ($2,000) | ||
| Y; YY | $180,000 | $290,000 | $60,000 | $110,000 | $50,000 | ||
| Z; ZZ | $90,000 | $110,000 | $2,000 | $20,000 | $18,000 | ||
| $710,000 | $970,000 | $134,000 | $260,000 | $126,000 |
By-Product demo
| Information in Units of Each Product | Joint costs | $170,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 20,000 | 17,000 | 3,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $665,000 | ||||||||||||
| Production costs | $170,000 | Cost of goods sold: 95,000 units at $1.50/unit | 142,500 | |||||||||||
| Less: NRV of by-product | 20,000 | Gross margin | 522,500 | |||||||||||
| Net joint product cost | $150,000 | Less: nonmanufacturing expenses | 200,000 | |||||||||||
| Net product cost per unit | $1.50 | Operating income | $322,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $170,000 | Main product: 5,000 units at $1.50 | $7,500 | |||||||||||
| By-product: 3,000 units at $1 | 3,000 | |||||||||||||
| Net product cost per unit | $1.70 | Value of ending inventory for balance sheet | $10,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $665,000 | $2,000 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 17,000 | |||||||||||||
| Total revenue | 682,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 161,500 | |||||||||||||
| Gross margin | 520,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $320,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $8,500 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Beginning
Inventory
Prod-
uctionSales
Ending
Inventory
Main product0100,00095,0005,000
By-product010,0003,0007,000
Information in Units of Each Product
Production costs $480,000
Less: NRV of by-product10,000
Net joint product cost$470,000
Net product cost per unit$4.70
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Revenue: 95,000 units at $10/unit$950,000
Cost of goods sold: 95,000 units at $4.70/unit446,500
Gross margin503,500
Less: nonmanufacturing expenses250,000
Operating income$253,500
Revenue: 95,000 units at $10/unit$950,000
Cost of goods sold: 95,000 units at $4.70/unit446,500
Gross margin503,500
Less: nonmanufacturing expenses250,000
Operating income$253,500
Ending inventory:
Main product: 5,000 units at $4.70
$23,500
By-product: 7,000 units at $17,000
Value of ending inventory for balance sheet$30,500
Ending inventory:
Main product: 5,000 units at $4.70$23,500
By-product: 7,000 units at $17,000
Value of ending inventory for balance sheet$30,500
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | $950,000 | |||||||||||||
| Production costs | $480,000 | 446,500 | ||||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | $23,500 | ||||||||||||
| 7,000 | ||||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Production costs $480,000
Net product cost per unit$4.80
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | ||||||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | |||||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | ||||||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | |||||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | |||||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | |||||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | |||||||||||
| By-product: 7,000 units at $1 | 7,000 | |||||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $950,000 | -$43,500 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 3,000 | |||||||||||||
| Total revenue | 953,000 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 456,000 | |||||||||||||
| Gross margin | 497,000 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $297,000 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Revenue: 95,000 units at $10/unit$950,000
By-product sales: 3,000 units at $1/unit3,000
Total revenue953,000
Cost of goods sold: 95,000 units at $4.80/unit456,000
Gross margin497,000
Less: nonmanufacturing expenses250,000
Operating income$247,000
Revenue: 95,000 units at $10/unit$950,000
By-product sales: 3,000 units at $1/unit3,000
Total revenue953,000
Cost of goods sold: 95,000 units at $4.80/unit456,000
Gross margin497,000
Less: nonmanufacturing expenses250,000
Operating income$247,000
Ending inventory:
Main product: 5,000 units at $4.80
$24,000
Ending inventory:
Main product: 5,000 units at $4.80$24,000
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | |||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | ||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | |||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | |||||||
| NRV method (recognize at time of production) | |||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | |||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | ||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | ||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | ||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | ||||||||
| RV method (recognize at time of sale) | Ending inventory: | ||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | ||||||||
| By-product: 7,000 units at $1 | 7,000 | ||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | ||||||||
| RV method (recognize at time of sale) | |||||||||||
| $950,000 | |||||||||||
| 3,000 | |||||||||||
| Total revenue | 953,000 | ||||||||||
| 456,000 | |||||||||||
| Gross margin | 497,000 | ||||||||||
| Less: nonmanufacturing expenses | 250,000 | ||||||||||
| Operating income | $247,000 | ||||||||||
| Ending inventory: | |||||||||||
| Main product: 5,000 units at $4.80 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | |||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | ||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | |||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | |||||||
| NRV method (recognize at time of production) | |||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | |||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | ||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | ||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | ||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | ||||||||
| RV method (recognize at time of sale) | Ending inventory: | ||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | ||||||||
| By-product: 7,000 units at $1 | 7,000 | ||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | ||||||||
| RV method (recognize at time of sale) | |||||||||||
| Revenue: 95,000 units at $10/unit | $950,000 | ||||||||||
| By-product sales: 3,000 units at $1/unit | 3,000 | ||||||||||
| Total revenue | 953,000 | ||||||||||
| Cost of goods sold: 95,000 units at $4.80/unit | 456,000 | ||||||||||
| Gross margin | 497,000 | ||||||||||
| Less: nonmanufacturing expenses | 250,000 | ||||||||||
| Operating income | $247,000 | ||||||||||
| Ending inventory: | |||||||||||
| Main product: 5,000 units at $4.80 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | |||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | ||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | |||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | |||||||
| NRV method (recognize at time of production) | |||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | |||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | ||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | ||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | ||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | ||||||||
| RV method (recognize at time of sale) | Ending inventory: | ||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | ||||||||
| By-product: 7,000 units at $1 | 7,000 | ||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | ||||||||
| RV method (recognize at time of sale) | |||||||||||
| $950,000 | |||||||||||
| 3,000 | |||||||||||
| Total revenue | 953,000 | ||||||||||
| 456,000 | |||||||||||
| Gross margin | 497,000 | ||||||||||
| Less: nonmanufacturing expenses | 250,000 | ||||||||||
| Operating income | $247,000 | ||||||||||
| Ending inventory: | |||||||||||
| $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
Joint cost example
| joint costs | 70000 | ||||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Weight | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 57.1% | $40,000 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 28.6% | $20,000 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 14.3% | $10,000 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Product | Pounds Produced | Selling Price per Pound | Total Sales Value at Split-Off | Relative Sales Value | Allocated Joint Costs | ||||
| Peach halves | 160,000 | $0.50 | $80,000 | 64.5% | $45,161 | ||||
| Peach slices | 80,000 | $0.40 | $32,000 | 25.8% | $18,065 | ||||
| Peach purée | 40,000 | $0.30 | $12,000 | 9.7% | $6,774 | ||||
| 280,000 | $124,000 | 100.0% | $70,000 | ||||||
| Allocated Joint Costs | Gross Margin | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $45,161 | $40,000 | $34,839 | ||||
| Peach slices | $32,000 | $20,000 | $18,065 | $12,000 | $13,935 | ||||
| Peach purée | $12,000 | $10,000 | $6,774 | $2,000 | $5,226 | ||||
| $124,000 | $70,000 | $70,000 | $54,000 | $54,000 | |||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Total Sales Value at Split-Off | Physical Volume Method | Sales Value at Split-Off Method | Physical Volume Method | Sales Value at Split-Off Method | ||||
| Peach halves | $80,000 | $40,000 | $34,839 | 50.0% | 43.5% | ||||
| Peach slices | $32,000 | $12,000 | $13,935 | 37.5% | 43.5% | ||||
| Peach purée | $12,000 | $2,000 | $5,226 | 16.7% | 43.5% | ||||
| $124,000 | $54,000 | $54,000 | 43.5% | 43.5% | |||||
| Product | Final Sales Value | Separable Costs | NRV | Relative NRV | Allocated Joint Costs | ||||
| Canned peaches | $180,000 | $60,000 | $120,000 | 64.2% | $44,920 | ||||
| Peach pie | $120,000 | $70,000 | $50,000 | 26.7% | $18,717 | ||||
| Peach juice | $50,000 | $33,000 | $17,000 | 9.1% | $6,364 | ||||
| $350,000 | $163,000 | $187,000 | 100.0% | $70,000 | |||||
| overall GM% = | 33.4% | ||||||||
| Product | Final Sales Value | Separable Costs | Allocated Joint Costs | Gross Margin | Gross Margin Ratio | ||||
| Canned peaches | $180,000 | $60,000 | $59,829 | $60,171 | 33.4% | ||||
| Peach pie | $120,000 | $70,000 | $9,886 | $40,114 | 33.4% | ||||
| Peach juice | $50,000 | $33,000 | $286 | $16,714 | 33.4% | ||||
| $350,000 | $163,000 | $70,000 | $117,000 | ||||||
| Gross Margin | Gross Margin Ratio | ||||||||
| Product | Final Sales Value | NRV Method | Constant GM NRV Method | NRV Method | Constant GM NRV Method | ||||
| Peach halves | $180,000 | $75,080 | $60,171 | 41.7% | 33.4% | $100,000 | |||
| Peach slices | $120,000 | $31,283 | $40,114 | 26.1% | 33.4% | $88,000 | |||
| Peach purée | $50,000 | $10,636 | $16,714 | 21.3% | 33.4% | $38,000 | |||
| $350,000 | $117,000 | $117,000 | 33.4% | 33.4% |
sell or process further
| Kit | Final Sales Value | Sales Value at Split-Off | Sep-arable Costs | Incre-mental Revenue | Incre-mental Profit if Process Further | Sell at Split-Off or Process Further? | |
| A | $200,000 | $180,000 | $25,000 | $20,000 | ($5,000) | Sell | |
| B | $120,000 | $60,000 | $40,000 | $60,000 | $20,000 | Process | |
| C | $80,000 | $40,000 | $10,000 | $40,000 | $30,000 | Process |
By-Product demo
| Information in Units of Each Product | Joint costs | $480,000 | |||||||||
| Beginning Inventory | Prod-uction | Sales | Ending Inventory | SP of main product | 10 | ||||||
| Main product | 0 | 100,000 | 95,000 | 5,000 | SP of by-product | 1 | |||||
| By-product | 0 | 10,000 | 3,000 | 7,000 | |||||||
| NRV method (recognize at time of production) | |||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $10/unit | $950,000 | |||||||||
| Production costs | $480,000 | Cost of goods sold: 95,000 units at $4.70/unit | 446,500 | ||||||||
| Less: NRV of by-product | 10,000 | Gross margin | 503,500 | ||||||||
| Net joint product cost | $470,000 | Less: nonmanufacturing expenses | 250,000 | ||||||||
| Net product cost per unit | $4.70 | Operating income | $253,500 | ||||||||
| RV method (recognize at time of sale) | Ending inventory: | ||||||||||
| Production costs | $480,000 | Main product: 5,000 units at $4.70 | $23,500 | ||||||||
| By-product: 7,000 units at $1 | 7,000 | ||||||||||
| Net product cost per unit | $4.80 | Value of ending inventory for balance sheet | $30,500 | ||||||||
| RV method (recognize at time of sale) | |||||||||||
| $950,000 | |||||||||||
| 3,000 | |||||||||||
| Total revenue | 953,000 | ||||||||||
| 456,000 | |||||||||||
| Gross margin | 497,000 | ||||||||||
| Less: nonmanufacturing expenses | 250,000 | ||||||||||
| Operating income | $247,000 | ||||||||||
| Ending inventory: | |||||||||||
| Main product: 5,000 units at $4.80 | $24,000 |
EOC ex 2
| Final Sales Value | Sep-arable Costs | Net Realiz-able Value | |||
| Patio rocks | $864,000 | $60,000 | $804,000 | 80.723% | |
| Concrete mix | $200,000 | $8,000 | $192,000 | 19.277% | |
| Total | $1,064,000 | $68,000 | $996,000 | ||
| Patio Rocks | Concrete Mix | Total | |||
| Revenue | $864,000 | $200,000 | $1,064,000 | ||
| Joint costs | $401,233 | $98,767 | $500,000 | ||
| Separable costs | $60,000 | $8,000 | $68,000 | ||
| Gross margin | $402,767 | $93,233 | $496,000 | ||
| Gross margin % | 46.617% | 46.617% | 46.617% |
PSB ex
| Nonmfg exp | 163000 | |||||||||||||
| Information in Units of Each Product | Joint costs | $220,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of main product | 7.5 | |||||||||
| Main product | 0 | 80,000 | 65,000 | 15,000 | SP of by-product | 0.8 | ||||||||
| By-product | 0 | 6,000 | 5,000 | 1,000 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | $487,500 | ||||||||||||
| Production costs | $220,000 | Cost of goods sold: 95,000 units at $1.50/unit | 174,850 | |||||||||||
| Less: NRV of by-product | 4,800 | Gross margin | 312,650 | |||||||||||
| Net joint product cost | $215,200 | Less: nonmanufacturing expenses | 163,000 | |||||||||||
| Net product cost per unit | $2.6900 | Operating income | $149,650 | |||||||||||
| RV method (recognize at time of sale) | Ending inventory: | |||||||||||||
| Production costs | $220,000 | Main product: 5,000 units at $1.50 | $40,350 | |||||||||||
| By-product: 3,000 units at $1 | 800 | |||||||||||||
| Net product cost per unit | $2.7500 | Value of ending inventory for balance sheet | $41,150 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | $487,500 | -$100 | ||||||||||||
| By-product sales: 17,0000 units at $1/unit | 4,000 | |||||||||||||
| Total revenue | 491,500 | |||||||||||||
| Cost of goods sold: 95,000 units at $1.70/unit | 178,750 | |||||||||||||
| Gross margin | 312,750 | |||||||||||||
| Less: nonmanufacturing expenses | 163,000 | |||||||||||||
| Operating income | $149,750 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $41,250 |
EOC ex 3
| Information in Units of Each Product | Joint costs | $500,000 | ||||||||||||
| Beginning Inventory | Production | Sales | Ending Inventory | SP of purses | 25 | |||||||||
| Purses | 2,000 | 30,000 | 24,000 | 8,000 | SP of wallets | 10 | ||||||||
| Wallets | 4,000 | 20,000 | 15,000 | 9,000 | SP of by-product | 1 | ||||||||
| By-product | 1,000 | 4,000 | 2,500 | 2,500 | ||||||||||
| NRV method (recognize at time of production) | ||||||||||||||
| NRV method (recognize at time of production) | Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | |||||||||||
| Production costs | $500,000 | Cost of goods sold: | ||||||||||||
| Less: NRV of by-product | 4,000 | [2,000+4,000]@$8.928+[(24,000+15,000)-(2,000+4,000)]@$9.92 | ||||||||||||
| Net joint product cost | $496,000 | 380,928 | ||||||||||||
| Gross margin | 369,072 | |||||||||||||
| Net product cost per unit | $9.92 | ($496,000/50,000 units) | Less: nonmanufacturing expenses | 200,000 | ||||||||||
| Last year's product cost/unit | $8.928 | Operating income | $169,072 | |||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Production costs | $500,000 | Ending inventory: | ||||||||||||
| Main products: 17,000 units at $9.92 | $168,640 | |||||||||||||
| Net product cost per unit | $10.00 | By-product: 2,500 units at $1 | 2,500 | |||||||||||
| Value of ending inventory for balance sheet | $171,140 | |||||||||||||
| Last year's product cost/unit | $9.00 | |||||||||||||
| $110,572 | ||||||||||||||
| RV method (recognize at time of sale) | ||||||||||||||
| Revenue: 95,000 units at $7/unit | (24,000 @ $25 + 15,000 @ $10) | $750,000 | ||||||||||||
| By-product sales: 2,5000 units at $1/unit | 2,500 | |||||||||||||
| Total revenue | 752,500 | |||||||||||||
| Cost of goods sold: | ||||||||||||||
| [2,000+4,000]@$9+[(24,000+15,000)-(2,000+4,000)]@$10 | 494,000 | |||||||||||||
| Gross margin | 258,500 | |||||||||||||
| Less: nonmanufacturing expenses | 200,000 | |||||||||||||
| Operating income | $58,500 | |||||||||||||
| Ending inventory: | ||||||||||||||
| Main product: 5,000 units at $1.70 | $170,000 |
