PT TOBA produces two types of products both TAKO and TAKI through joint producti

Question

PT TOBA produces two types of products both TAKO and TAKI through joint production process. Both products must be further processed and then it can be sold. In April 2016 the production cost incurred consisted of a prime cost of $ 10,000, a direct labor cost of $ 4,000 and a conversion cost of $ 14,000. The production process in April produced 500 units of TAKO and 2,000 TAKI units. The cost for further processing TAKO is $ 5 per unit and TAKI $ 10 per unit. The selling price of TAKO and TAKI per unit is $ 25 and $ 20.
Requested: During April 2016 has sold 400 units of TAKO and 1700 units of TAKI, using the NRV method, calculate the gross profit earned in April 2016.

Note : PT TOBA is an example of a firm

Explanation / Answer

Prime cost          10,000 Direct Labor cost            4,000 Conversion cost          14,000 Total joint cost          28,000 TAKO TAKI Total Units produced                500              2,000            2,500 Apportionment of joint cost ($ )            5,600           22,400          28,000 Apr-16 TAKO TAKI Total Units sold                400              1,700 $ $ Selling price                  25                    20 Sales Revenue          10,000           34,000          44,000 Less: Joint cost          (5,600)         (22,400) Less: Further processing cost          (2,000)         (17,000) Gross Profit            2,400           (5,400)          (3,000)

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