Question

1. The Evrett Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a single splitoff point. Products X and Y are ready for sale immediately upon splitoff without further processing or any other additional costs. Product Z, however, is processed further before being sold. There is no available market price for Z at the splitoff point. The selling prices quoted here are expected to remain the same in the coming year. During 2012, the selling prices of the items and the total amounts sold were as follows:

X—75 tons sold for $1,800 per ton

Y—225 tons sold for $1,300 per ton

Z—280 tons sold for $800 per ton

The total joint manufacturing costs for the year were $328,000. Evrett spent an additional $120,000 to finish product Z. There were no beginning inventories of X, Y, or Z. At the end of the year, the following inventories of completed units were on hand: X, 175 tons; Y, 75 tons; Z, 70 tons. There was no beginning or ending work in process.

Compute the cost of inventories of X, Y, and Z for balance sheet purposes and the cost of goods sold for income statement purposes as of December 31, 2012, using the  NRV method.(2pts)

solve it in Microsoft word please

Answer 1

	Total production for the year was:
	Inventory	Sold [A]	Ending Inventory[B]	Total Production[C]	Ending inventory percentage [B]/[C]*100
	X	75	175	250	70%
	Y	225	75	300	25%
	Z	280	70	350	20%
		X	Y	Z	Total
Final sales value of total production		450000	390000	280000	1120000
		(250 tonn*$1800)	(300 tonn*1300)	(350 tonne*$800)
Deduct separable costs		0	0	120000	120000
Net realizable value at splitoff point		450000	390000	160000	1000000
Weighting		0.45	0.39	0.16
Joint costs allocated [$328000*weights]	147600	127920	52480	328000
Income Statement		X	Y	Z	TOTAL
Revenues		$    135,000.00	$ 292,500.00	$ 224,000.00	$    651,500.00
		(75 tonn*$1800)	(225 tonn*1300)	(280 tonne*$800)
Less: Cost of goods sold:
Joint costs allocated		$    147,600.00	$ 127,920.00	$    52,480.00	$    328,000.00
Separable costs				$ 120,000.00	$    120,000.00
Production Cost		$    147,600.00	$ 127,920.00	$ 172,480.00	$    448,000.00
					$                     -
Deduct ending inventory,					$                     -
70%, 25%, 20% of production Cost		$ (103,320.00)	$ (31,980.00)	$ (34,496.00)	$ (169,796.00)
					$                     -
COGS		$      44,280.00	$    95,940.00	$ 137,984.00	$    278,204.00
Gross margin [Revenues - COGS]		$      90,720.00	$ 196,560.00	$    86,016.00	$    373,296.00
Gross-margin percentage		67.20%	67.20%	38.40%
		X	Y	Z
COST OF CLOSING INVENTORY		$    103,320.00	$    31,980.00	$    34,496.00
COST OF GOODS SOLD		$      90,720.00	$ 196,560.00	$    86,016.00