Staples LTD. manufactures two industrial compounds. In the month of Oct, 15 000

Question

Staples LTD. manufactures two industrial compounds. In the month of Oct, 15 000 litres of direct material costing $160,000 were processed at a cost of $400 000. The joint process yielded 16 000 containers of a compound known as Jarlon and 4000 containers of a compound known as kharton. The respective selling prices of jarlon and kharton are $38 and $58. both products may be processed further. jarlon may be processed into Jaxton at an incremental cost of $32 per jar of the final product. The volume of jars of the final product are: 12 000 and 3 000 for jaxton and kraxton respectively. The selling price of jaxton is $48 per jar. the selling price of kraxton is $102 per jar. SHOW WORK

1)asumming the company uses the sales value at splitoff method and 2000 containers of jarlon and 75 containers of kharton are unsold at the end of the period. staples would report ending inventory of?

a)$38272

b) $56598

c) $53560

d) $79240

e) $58100

2) asumming staples uses the physical measures method and the 2000 containers of jarlon and 75 containers of kharton are unsold at the end of the period, staple swould report cost of goods sold of?

a)$501900

b)$358500

c) $506400

d)$58100

e)$143400

Explanation / Answer

1. Total costs incurred till split off point = $160000 + 400000 = $560000

Total sales value at split off point = ($38 x 16000) + ($58 x 4000) = $608000 + 232000 = $840000

Costs allocated to Jarlon = 608000/ 840000 x 560000 = $405333

Ending inventory of Jarlon = $405333/ 16000 x 2000 = $50660

Costs allocated to Kharton = 232000/ 840000 x 560000 = $154667

Ending inventory of Kharton = $154667/ 4000 x 75 = $2900

Total ending inventory = $50667 + 2900 = $53560

Ans is c.

2. Total costs incurred till split off point = $160000 + 400000 = $560000

Costs allocated to Jarlon = 560000/ 20000 x 16000 = $448000

Ending inventory of Jarlon = $448000/ 16000 x 2000 = $56000

Costs allocated to Kharton = 560000/ 20000 x 4000 = $112000

Ending inventory of Kharton = $112000/ 4000 x 75 = $2100

Total ending inventory = $56000 + 2100 = $58100

Ans is d.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.