Joint
Products and Joint Product Cost:
Joint products are produced simultaneously by a common process or series
of processes, with each product processing more than a nominal value in the
form in which it is produced. The definition emphasizes the point that
the manufacturing process creates products in a definite quantitative
relationship. An increase in one product's output will bring about an increase
in the quantity of the other products, or vice versa, but not necessarily in
the same proportion.
A joint
product cost may be defined as that cost which arises from the common
processing or manufacturing of products produced from a common raw material. Whenever two or more
different products are created from a single cost factor, a joint product cost
results. A joint cost is incurred prior to the point at which separately
identifiable products emerge from the same process.
Market or sales value method enjoys
great popularity because of the argument that market value of any product
is a manifestation of the
cost incurred in its production. The contention is that if one product sells
for more than another, it is because more cost was expended to produce it.
Therefore, the way to prorate the joint cost is on the basis of the respective market values of the items
produced. The method is
really a weighted market value basis using the total market or sales value of
each unit (quantity sold times the unit sales price).
Example:
Joint products A, B, C and D are produced at a total joint production cost of P120,000. Quantities produced are: A, 20,000 units; B, 15,000
units; C, 10,000 units; and D, 15,000 units. Product A sells for P0.25; B, for P3;
C, for P3.5; and D, for P5. These prices are market or sales values for the
products at the split-off point; i.e.,
it is assumed that they can be sold at a that point.Management may have decided, however, that it is more profitable to process
certain products further before they are sold. Nevertheless, this condition
does not destroy the usefulness of the sales value at the split-off point for the allocation of the joint production cost. The
proration of this joint cost is made in the following manner:
|
The same results can be obtained if the total joint production cost (P120,000) is divided by the total market value of the four
products (P160,000). The resulting 75 percent is the percentage of joint cost in each individual market value. By multiplying each market value
by this percentage, the joint production cost will be apportioned as shown in the percentage chart.
Proponents of the market value method or sales value method stat
that the joint cost should be assigned to products in accordance with their sales
value because, were it not for such a cost, a sales value would not exist.
Under this method, each Joint product yields the same unit gross profit percentage, assuming that the
units are sold without further processing. This can is illustrated in the
following example:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consideration of Cost
After Split-Off Point:
Products not stable in their stage of completion at the split-off point and therefore without any market value require additional
processing to place them in marketable condition. In such cases, the basis for allocation of the
joint production cost is a hypothetical market value at the split-off point. To
illustrate the procedure, the assumptions listed below are added to the
preceding example:
|
To arrive at the
basis of the apportionment, it is necessary to use a working back procedurewhereby the after
split-off processing cost is subtracted from the ultimate sales value to find a
hypothetical market value. The following illustration indicates the steps to be
taken.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following illustration uses the same number of units sold as
was used in the preceding illustration.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Since the statement has often been made that every Joint product should be equally profitable, the following modification of the
sales value technique has been suggested. The overall gross profit percentage
(32%) is used to determine the gross profit for each product. The gross profit
is deducted from sales value to find the total cost, which is reduced by each
product's further processing cost to find the joint cost allocation for
each product.
|
If sales value, gross profit percentage, or further processing
costs are estimated, the balance labeled "joint cost"
would serve as the basis for allocating the actual
cost to the four products.
The term "by
product" is generally used to denote one or more products of
relatively small total value that are produced simultaneously
with a product of greater total value. The product with
the greater value, commonly called the "main product", is
usually produced in greater quantities than the by products.
Ordinarily, the manufacturer has only limited control over the quantity of the
by product that comes into existence. However, the introduction of more
advanced engineering methods, such as in the petroleum industry, has permitted
greater control over the quantity of residual products. In fact, one company,
which formerly paid a trucker to haul away and dump certain waste materials,
discovered that the waste was valuable as fertilizer, and this by product is
now an additional source of income for the entire industry.
The accounting treatment
of by-products necessitates a reasonably complete knowledge of the
technological factors underlying their manufacture, since the origins of by
products may vary. By-products arising from the cleansing of the main product,
such as gas and tar from coke manufacture, generally have a residual
value. In some cases, the by product is left over scrap or waste, such as
sawdust in lumber mills. In other cases, the by product may not be the result
of any manufacturing process but may arise from preparing raw materials before they are
used in the manufacture of the main product. The separation of
cotton seed from cotton, cores and seeds from apples, and shells from coca
beans are examples of this type of product.
By product can be
classified into the following two groups according to their marketable
condition at the split-off point:
- Those sold in their original form without need of further processing.
- Those which require further processing in order to be saleable.
Recognition of Gross Revenue Method--By Products Costing:
This
method is typical non-cost procedure in
which the final inventory cost of the main product isoverstated
to the extent that some of the cost belongs to the by product.
However
this shortcoming is somewhat removed in procedure 4 (by product revenue deducted from
the production
cost), although a sales value rather
than a cost is deducted from the production cost of the main product.
- By-Product Revenue as Other Income
- By-Product Revenue as Additional Sales Revenue
- By Product Revenue as a Deduction from the Cost of Goods Sold
- By Product Revenue deducted from Production Cost
1.By-Product Revenue as Other Income:
To
explain this procedure the following example is presented:
Example:
|
Sales
(Main Product, 10,000 units @ P2)
|
|
P20,000
|
|
Cost
of goods sold:
|
|
|
|
Beginning
inventory (1,000 units @ P1.5)
|
P1,500
|
|
|
Total production cost (11,000 units @ P1.5)
|
P16,500
|
|
|
-------
|
||
|
Cost
of goods avail able for sale
|
P18,000
|
|
|
Ending
inventory (2,000 units @ P1.5)
|
P3,000
|
|
|
|
-------
|
|
|
P15,000
|
||
|
--------
|
||
|
Gross
profit
|
|
5,000
|
|
Marketing and administrative expenses
|
P2,000
|
|
|
--------
|
||
|
Operating
income
|
|
P3,000
|
|
Other
income: Revenue
from sale of by-product
|
|
P1,500
|
|
--------
|
||
|
Income
before income tax
|
P4,500
|
|
|
=====
|
2. By-Product Revenue as Additional Sales Revenue:
In
this case, the income statement above would show the P1,500 revenue from sales
of the by product as an addition to sales of the main product. As a result,
total sales revenue would be P21,500, and gross profit and operating income
would increase accordingly. All other figures would remain the same.
3. By Product Revenue as a Deduction from the Cost of Goods Sold:
In
this case, P1,500 revenue from the by product would be deducted from the P15,000 cost of goods sold
figure, thereby reducing the cost and increasing the gross profit and operating
income. The income before income tax remains at P4,500.
4. By Product Revenue deducted from Production Cost:
In
this case, the P1,500 revenue from by-product sales is deducted from the P16,500 totalproduction cost,
giving a new production cost of P15,000. This revised cost results
in a new average unit cost of P1.3625 for the main product. The final inventory will consequently be P2,725
instead of P3,000. The income statement would appear as follows:
|
Sales
(Main Product, 10,000 units @ P2)
|
|
|
P20,000
|
|
Cost
of goods sold:
|
|
|
|
|
Beginning
inventory (1,000 units @ P1.35)
|
|
P1,350
|
|
|
Total production cost (11,000 units @ P1.5)
|
P16,500
|
|
|
|
Revenue
from sale of by product
|
P1,500
|
|
|
|
|
---------
|
|
|
|
Net production cost
|
|
P15,000
|
|
|
Cost
of goods available for sale 12000units @1.3625 average cost
|
|
P16350 |
|
|
Ending inventory (2,000 units @ P1.3625)
|
P2,725
|
||
|
|
|
-------
|
|
|
|
|
|
P13,625
|
|
|
|
|
----------
|
|
Gross
profit
|
|
|
P6,375
|
|
Marketing and administrative expenses
|
|
|
P2,000
|
|
|
|
|
----------
|
|
Operating
income
|
|
|
P4,375
|
|
|
|
|
======
|
The preceding method required no complicated journal entries.
The revenue received from by product sales is debited to cash or accounts
receivable. In the first three cases, income from sales of by product is credited; in the fourth case, the production cost of the main product iscredited.
PROBLEM
Bradshaw Company
Bradshaw Company produces only two products and incurs joint
processing costs that total P3,750. Products Alpha and Beta are produced in the
following quantities during each month: 4,500 and 6,000 gallons, respectively.
Bradshaw Company also runs one ad each month that advertises both products at a
cost of P1,500. The selling price per gallon for the two products are P20 and P17.50,
respectively.
1. Refer
to Bradshaw Company. What amount of joint processing costs is allocated to each
product based on gallons produced?
ANS:
A = 4,500/10,500 ´ P3,750 = P1,607
I = 6,000/10,500 ´ P3,750 = P2,143
2. Refer
to Bradshaw Company. What amount of advertising cost is allocated to each
product based on sales value?
ANS:
|
A = 4,500 ´ P20.00 =
|
P 90,000/P195,000 ´ P1,500 = P692
|
|
I = 6,000 ´ P17.50 =
|
105,000/P195,000 ´ P1,500 = P808
|
|
|
P195,000
|
Sunderland Company
Sunderland Company produces three products from the same process
and incurs joint processing costs of P3,000.
|
|
Gallons
|
Sales price
per gallon
at split-off
|
Disposal
cost per
gallon at
split-off
|
Further
processing
costs
|
Final sales
price per
gallon
|
|
M
|
2,300
|
P 4.50
|
P1.25
|
P1.00
|
P 7.00
|
|
N
|
1,100
|
6.00
|
3.00
|
2.00
|
10.00
|
|
Q
|
500
|
10.00
|
8.00
|
2.00
|
15.00
|
Disposal costs for the products if they are processed further are:
M, P3.00; N, P5.50; Q, P1.00.
3. Refer
to Sunderland Company. What amount of joint processing cost is allocated to the
three products using sales value at split-off?
ANS:
|
M = 2,300 ´ P 4.50 =
|
P10,350/P21,950 ´ P3,000 = P1,415
|
|
N = 1,100 ´ P 6.00 =
|
P 6,600/P21,950 ´ P3,000 = P902
|
|
Q = 500 ´ P10.00 =
|
P 5,000/P21,950 ´ P3,000 = P683
|
|
|
P21,950
|
4. Refer
to Sunderland Company. What amount of joint processing cost is allocated to the
three products using net realizable value at split-off?
ANS:
|
Sales price minus disposal cost*
|
|
|
P4.50 - P1.25 = P3.25
|
|
|
P6.00 - P3.00 = 3.00
|
|
|
P10.00 - P8.00 = 2.00
|
|
|
|
|
|
M = 2,300 ´ P 3.25* =
|
P 7,475/P11,775 ´ P3,000 = P1,904
|
|
N = 1,100 ´ P 3.00* =
|
P 3,300/P11,775 ´ P3,000 = P 841
|
|
Q = 500 ´ P 2.00* =
|
P 1,000/P11,775 ´ P3,000 = P 255
|
|
|
P11,775
|
5. Leigh
Company produces two main products jointly, A and B, and C, which is a
by-product of B. A and B are produced from the same raw material. C is
manufactured from the residue of the process creating B.
Costs before separation are apportioned between the two main
products by the net realizable value method. The net revenue realized from the
sale of C is deducted from the cost of B. Data for April were as follows:
|
Costs before separation
|
P200,000
|
|
|
Costs after separation:
|
|
|
|
A
|
50,000
|
|
|
B
|
32,000
|
|
|
C
|
4,000
|
|
|
|
|
|
|
Production for April, in pounds:
|
|
|
|
A
|
800,000
|
|
|
B
|
200,000
|
|
|
C
|
20,000
|
|
|
|
|
|
|
Sales for April:
|
|
|
|
A
|
640,000 pounds @ P.4375
|
|
|
B
|
180,000 pounds @ .65
|
|
|
C
|
20,000 pounds @ .30
|
|
Required: Determine the gross
profit for April.
ANS:
|
NRV C
|
REVENUE 20,000 ´ .30 =
|
P6,000
|
||||||
|
|
COST
|
(4,000)
|
||||||
|
|
NRV
|
P2,000
|
||||||
|
|
|
|
||||||
|
NRV:
|
|
|
||||||
|
A (800,000 ´ P.4375) = P350,000 - P50,000 =
|
P300,000
|
|||||||
|
B (200,000 ´ P.65) = P130,000 - (P32,000
- P2,000) =
|
100,000
|
|||||||
|
|
|
|
P400,000
|
|||||
|
|
|
|
|
|||||
|
ALLOCATION:
|
|
|||||||
|
A (P300,000/P400,000 ´ P200,000 =
|
P150,000
|
|||||||
|
B (P100,000/P400,000 ´ P200,000 =
|
50,000
|
|||||||
|
|
|
|
|
|||||
|
UNIT COST:
|
|
|||||||
|
A (P150,000 + P50,000)/800,000
= P .25
|
|
|||||||
|
B (P50,000 + P30,000)/200,000 = P .40
|
|
|||||||
|
|
|
|
|
|||||
|
GROSS PROFIT:
|
|
|||||||
|
A (P .4375 - P.25) ´ 640,000 =
|
P120,000
|
|||||||
|
B (P .65 - P.40) ´ 180,000 =
|
45,000
|
|||||||
|
|
|
P165,000
|
||||||
6. Leigh
Manufacturers produces three products from a common manufacturing process. The total joint cost of producing 2,000
pounds of Product A; 1,000 pounds of Product B; and 1,000 pounds of Product C
is P7,500. Selling price per pound of the three products are P15 for Product A;
P10 for Product B; and P5 for Product C. Joint cost is allocated using the
sales value method.
Required:
|
a.
|
Compute the unit cost of Product A if all three products are
main products.
|
|
b.
|
Compute the unit cost of Product A if Products A and B are main
products and Product C is a by-product for which the cost reduction method is
used.
|
ANS:
|
a.
|
SALES VALUE
|
|
|
UNIT COST
|
||
|
|
|
|
|
|
||
|
|
A
|
2,000 ´ P15 =
|
P30,000/P45,000 ´ P7,500 =
|
P5,000/2,000 = P2.50
|
||
|
|
|
|
|
|
||
|
|
B
|
1,000 ´ P10 =
|
P10,000/P45,000 ´ P7,500 =
|
P1,667/1,000 = P1.67
|
||
|
|
|
|
|
|
||
|
|
C
|
1,000 ´ P5 =
|
P 5,000/P45,000 ´ P7,500 =
|
P 833/1,000 = P .83
|
||
|
|
|
P45,000
|
|
P7,500
|
||
|
|
|
|
|
|
||
|
b.
|
TO ALLOCATE: P7,500 - P5,000 = P2,500
|
|
||||
|
|
|
|
|
|
||
|
|
SALES VALUE
|
|
|
UNIT COST
|
||
|
|
|
|
|
|
||
|
|
A
|
2,000 ´ P15 =
|
P30,000/P40,000 ´ P2,500 =
|
P1,875/2,000 = P.9375
|
||
|
|
|
|
|
|
||
|
|
B
|
1,000 ´ P10 =
|
P10,000/P40,000 ´ P2,500 =
|
P 625/1,000 = P.625
|
||
|
|
|
|
P40,000
|
P2,500
|
||
7. Hillcrest
Manufacturing Company makes three products: A and B are considered main
products and C a by-product.
Production and sales for the year were:
220,000 lbs. of Product A, salable at P6.00
180,000 lbs. of Product B, salable at P3.00
50,000 lbs. of Product C,
salable at P.90
Production costs for the year:
|
Joint costs
|
P276,600
|
|
Costs after separation:
|
|
|
Product A
|
320,000
|
|
Product B
|
190,000
|
|
Product C
|
6,900
|
Required: Using the by-product
revenue as a cost reduction and net realizable value method of assigning joint
costs, compute unit costs (a) if C is a by-product of the process and (b) if C
is a by-product of B.
ANS:
|
a.
|
JOINT COST
|
|
P276,600
|
|
||||||
|
|
- NRV C
|
|
(38,100) (50,000 * P.90) - P 6,900
|
|||||||
|
|
TO ALLOCATE
|
|
P238,500
|
|
||||||
|
|
|
|
|
|
||||||
|
|
SALES VALUE - COST AFTER SEPARATION = NRV
|
|||||||||
|
|
220,000 ´ P6 = P1,320,000
- P320,000 =
|
P1,000,000
|
|
|||||||
|
|
180,000 ´ P3 = P 540,000 - P190,000 =
|
350,000
|
|
|||||||
|
|
|
|
P1,350,000
|
|
||||||
|
|
|
|
|
|
||||||
|
|
ALLOCATION
|
|
|
|
||||||
|
|
P1,000,000/P1,350,000 ´ P238,500 =
|
P176,667
|
|
|||||||
|
|
P 350,000/P1,350,000 ´ P238,500 =
|
61,833
|
|
|||||||
|
|
|
|
P238,500
|
|
||||||
|
|
|
|
|
|
||||||
|
|
UNIT COST:
|
|
|
|
||||||
|
|
A (P176,667 + P320,000)/220,000 =
|
P2.26
|
|
|||||||
|
|
B (P61,833 + P190,000)/180,000 =
|
P1.40
|
|
|||||||
|
|
|
|
|
|
||||||
|
b.
|
NRV
|
|
|
|
||||||
|
|
A P1,000,000 =
P1,000,000/P1,388,100 ´ P276,600 = P199,265
|
|||||||||
|
|
B P350,000 + P38,100 = 388,100/P1,388,100 ´ P276,600 = P 77,335
|
|||||||||
|
|
P1,388,100
|
|
|
|||||||
|
|
|
|
|
|
||||||
|
|
UNIT COST
|
|
|
|
||||||
|
|
A (P199,265 + P320,000)/220,000
= P2.36
|
|
||||||||
|
|
B (P77,335 + P151,900)/180,000
= P1.27
|
|
||||||||
8. Baldwin
Company processes raw material in Department 1 from which come two main
products, A and B, and a by-product, C. A is further processed in Department 2,
B in Department 3, and C in Department 4. The value of the by-product reduces
the cost of the main products, and sales value is used to allocate joint costs.
|
|
Dept 1
|
Dept 2
|
Dept 3
|
Dept 4
|
|
Cost Incurred:
|
P90,000
|
P10,000
|
P8,000
|
P10,000
|
|
Production:
|
|
|
|
|
|
A
|
10,000 lbs.
|
|
|
|
|
B
|
20,000 lbs.
|
|
|
|
|
C
|
10,000 lbs.
|
|
|
|
|
|
|
|
|
|
|
Selling Price:
|
|
|
|
|
|
A
|
P10/lb.
|
|
|
|
|
B
|
P5/lb.
|
|
|
|
|
C
|
P2/lb.
|
|
|
|
Required:
|
a.
|
Compute unit costs for A and B.
|
|
b.
|
Ending inventory consists of 5,000 lbs. of B and 1,000 lbs. of
C. What is the value of the inventory?
|
|
c.
|
Recompute a and b allocating cost based on net realizable value.
|
ANS:
|
a.
|
JOINT COST
|
P90,000
|
|
|
||||
|
|
- SALES VALUE
|
(20,000)
|
(10,000 ´ P2)
|
|
||||
|
|
|
P70,000
|
|
|
||||
|
|
|
|
|
|
||||
|
|
SALES VALUE
|
|
|
|
||||
|
|
A
|
10,000 ´ P10 =
|
P100,000/P200,000 ´ P70,000 = P35,000
|
|||||
|
|
B
|
20,000 ´ P 5 =
|
100,000/P200,000 ´ P70,000 = P35,000
|
|||||
|
|
|
P200,000
|
|
|
||||
|
|
|
|
|
|
||||
|
|
UNIT COST
|
|
|
|
||||
|
|
A
|
(P35,000 + P10,000)/10,000 = P4.50
|
|
|||||
|
|
B
|
(P35,000 + P8,000)/20,000 = P2.15
|
|
|||||
|
|
|
|
|
|
||||
|
b.
|
ENDING INVENTORY
|
|
|
|||||
|
|
B
|
5,000 ´ P2.15 =
|
P10,750
|
|
||||
|
|
C
|
1,000 ´ P2.00 =
|
2,000
|
|
||||
|
|
|
|
P12,750
|
|
||||
|
|
|
|
|
|
||||
|
c.
|
NRV
|
|
|
|
||||
|
|
A
|
P100,000 - P10,000 =
|
P 90,000/P182,000 ´ P70,000 = P34,615
|
|||||
|
|
B
|
P100,000 - P8,000 =
|
92,000/P182,000 ´ P70,000 = 35,385
|
|||||
|
|
|
|
P182,000
|
P70,000
|
||||
|
|
|
|
|
|
||||
|
|
UNIT COST
|
|
|
|
||||
|
|
A
|
(P34,615 + P10,000)/10,000 = P4.46
|
|
|||||
|
|
B
|
(P35,385 + P8,000)/20,000 = P2.17
|
|
|||||
|
|
|
|
|
|
||||
|
|
ENDING INVENTORY
|
|
|
|||||
|
|
B
|
5,000 ´ P2.17 =
|
P10,850
|
|
||||
|
|
C
|
1,000 ´ P2.00 =
|
2,000
|
|
||||
|
|
|
|
P12,850
|
|
||||
9. Davenport
Corporation manufactures three identifiable product lines, Products A, B, and
C, from a basic processing operation. The cost of the basic operation is P320,000
for a yield of 5,000 tons of Product A; 2,000 tons of Product B; and 1,000 tons
of Product C. The basic processing cost is allocated to the product lines in
proportion to the relative weight produced.
Davenport Corporation does both the basic processing work and the
further refinement of the three product lines. After the basic operation, the
products can be sold at the following prices per metric ton:
Product A—P60
Product B—P53
Product C—P35
Costs to refine each of the three product lines follow:
|
|
Product Lines
|
||
|
|
A
|
B
|
C
|
|
Variable cost per metric ton
|
P8
|
P7
|
P4
|
|
Total fixed cost
|
P20,000
|
P16,000
|
P6,000
|
The fixed cost of the refining operation will not be incurred if
the product line is not refined.
The refined products can be sold at the following prices per
metric ton:
Product A—P75
Product B—P65
Product C—P40
Required:
|
a.
|
Determine the total unit cost of each product line in a refined
state.
|
|
b.
|
Which of the three product lines, if any, should be refined and
which should be sold after the basic processing operation? Show computations.
|
ANS:
|
|
|
WT
|
ALLOCATION
|
|
|||||||||
|
a.
|
A
|
5,000
|
5,000/8,000 ´ P320,000 =
|
P200,000
|
|||||||||
|
|
B
|
2,000
|
2,000/8,000 ´ P320,000 =
|
80,000
|
|||||||||
|
|
C
|
1,000
|
1,000/8,000 ´ P320,000 =
|
40,000
|
|||||||||
|
|
8,000
|
|
P320,000
|
||||||||||
|
|
|
|
|
|
|||||||||
|
|
UNIT COST
|
|
|
|
|||||||||
|
|
A
|
(P200,000 + P20,000)/5,000 + P8 =
|
P52
|
|
|||||||||
|
|
B
|
(P80,000 + P16,000)/2,000 + P7 =
|
P55
|
|
|||||||||
|
|
C
|
(P40000 + P6,000)/1,000 + P4 =
|
P50
|
|
|||||||||
|
|
|
|
|
|
|||||||||
|
b.
|
CHANGE IN REVENUE - CHANGE IN COST = CHANGE IN PROFIT
|
||||||||||||
|
|
A
|
P75-P60 = P15 - (P20,000/5,000) + P8 =
|
+ P3
|
||||||||||
|
|
B
|
P65-P53 = P12 - (P16,000/2,000) + P7 =
|
– P3
|
||||||||||
|
|
C
|
P40-P35 = P5 - (P6,000/1,000) + P4 =
|
– P5
|
||||||||||
|
|
|
|
|
|
|||||||||
|
|
Therefore, process only Product A.
|
|
|||||||||||
10. Rice
Company produced three joint products at a joint cost of P100,000. These
products were processed further and sold as follows:
|
Product
|
Sales
|
Additional
Processing Costs
|
|
A
|
P245,000
|
P200,000
|
|
B
|
330,000
|
300,000
|
|
C
|
175,000
|
100,000
|
The company has had an opportunity to sell at split-off directly
to other processors. If that alternative had been selected, sales would have
been: A, P56,000; B, P28,000; and C, P56,000.
The company expects to operate at the same level of production and
sales in the forthcoming year.
Required: Consider all the available
information and assume that all costs incurred after split-off are variable.
|
a.
|
Could the company increase net income by altering its processing
decisions? If so, what would be the expected overall net income?
|
|
b.
|
Which products should be processed further and which should be
sold at split-off?
|
ANS:
|
a.
|
Currently NI is
|
Sales
|
P750,000
|
|
|
|
|
Additional Processing Costs
|
(600,000)
|
|
|
|
|
|
|
P150,000
|
|
|
|
- JC
|
(100,000)
|
|
|
|
|
|
|
P
50,000
|
|
|
|
|
|
|
|
|
NI can be increased by P11,000 if A is not processed.
|
|
||
|
|
|
|
|
|
|
|
|
A
|
B
|
C
|
|
b.
|
D Sales
|
P189,000
|
P302,000
|
P119,000
|
|
|
- D Cost
|
(200,000)
|
(300,000)
|
(100,000)
|
|
|
NI/(LOSS)
|
P(11,000)
|
P 2,000
|
P
19,000
|
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