Question

Webster Company produces 25,000 units of product A, 20,000 units of product B, and 10,000 units of product C from the same manufacturing process at a cost of $340,000. A and B are joint products, and C is regarded as a by-product. The unit selling prices of the products are $30 for A, $25 for B, and $1 for C. None of the products require separable processing. Of the units produced, Webster Company sells 18,000 units of A, 19,000 units of B, and 10,000 units of C. The firm uses the net realizable value method to allocate joint costs and by-product costs. Assume no beginning inventory. (Do not round intermediate calculations.)

1. What is the value of the ending inventory of product A?

2. What is the value of the ending inventory of product B?

Answer 1

Answer:

Statement showing computations
Particulars	Amount
Joint Costs	340,000
Less: Sale proceeds of Unit C = 10,000*$1	(10,000)
Net joint cost to be allocated between A and B	330,000
	A	B	Total
No of Units obtained	25,000	20,000
Unit selling price	$30	$25
Sales Value	750,000	500,000	12,50,000
Allocation of Joint Costs = 750,000/12,50,000*330,000 and 500,000/12,50,000 * 330,000	198,000	132,000
Joint Cost per unit =Allocated JC/No of Units	$7.92	$6.6
Ending Inventory in units = 25,000-18,000 and 20,000-19,000	7,000 units	1,000 units
Ending inventory = Units * JC per unit	$55,440	$6,600