PT TOBA produces two types of products both TAKO and TAKI through joint producti
ID: 2521635 • Letter: P
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: Calculate the cost per unit of TAKO and TAKI by using Physical measure method, NRV method, and Constant gross margin percentage NRV method.
Explanation / Answer
Solution:
Total joint cost = $10,000 + $4,000 + $14,000 = $28,000
Constant gross margin percentage NRV method:
Final sale value of product = $12,500 + $40,000 = $52,500
Joint and separable cost = $28,000 + $22,500 = $50,500
Gross margin = $52500 - $50,500 = $2,000
Gross Margin percentage = $2,000 / $52,500 = 3.8095%
Computation of cost per unit - Physical measure method Particulars TAKO TAKI Total Output at split off point 500 2000 2500 Allocation of Joint Cost (5:20)Tako - 28000*5/25
Taki - 28000*20/25 $5,600.00 $22,400.00 $28,000.00 Further processing cost $2,500.00 $20,000.00 $22,500.00 Total Cost $8,100.00 $42,400.00 $50,500.00 Cost per unit $16.20 $21.20
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