## Determine the joint cost, Cost Accounting

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Determine the Joint Cost

A company produces three products, Y1, Y2, and Y3 in the similar process.  The data below reflects average monthly results as:

 Y1 Y2 Y3 Monthly output (kg) 40,000 20,000 20,000 Sales Value at split off (shs.) 0 30,000 105,000 Sales Value after Split off 45,000 100,000 155,000 Costs of further processing 20,000 40,000 65,000

The joint costs were Shs.100,000

Required

Assign the joint cost employing the three methods employed to assigned joint costs.

Solution

(i)  Physical/Measurement/Unit Method

 Y1 Y2 Y3 TOTAL Physical Output: (Kg) 40,000 20,000 20,000 80,000 Proportion 50% 25% 25% Joint costs allocated 50,000 25,000 25,000

(ii) Constant Gross Margin Rate Method

(iii) Net Realizable Value/Method

Net Realizable Value = Ultimate Sales Value - Separable Costs

 Y1 Y2 Y3 TOTAL Ultimate Sales Value: 45,000 100,000 155,000 Less: Separable Costs (20,000) (40,000) (65,000) Net Realizable Value: 25,000 60,000 90,000 175,000 Proportion on Net Realizable Value 14% 34% 52% Allocation of Joint Costs: 14,000 34,000 52,000 100,000

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