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  • Oct 7, 2007, 11:56 AM
    bud3babe88
    By-product costing
    How do I calculate manufacturing cost before separation for by products, using the market value (reversal cost) method for the following information:

    Sales:
    Main Product = $75,000
    By-product A = $ 6,000
    By-product B = $ 3,500


    manufacturing cost after separation:
    Main = $11,500
    A = $1,100
    B = $900

    Marketing & Administrative expenses:
    Main =$ 6,000
    A = $ 750
    B = $550

    The question asks to calculate the manufacturing costs before split off for each product.

    Profit allowed for A = 15% and B = 12%



    I appreciate any help because I have searched my book and the web and can't figure it out.

    Thanks in advance for any help,
    Tammy
  • Feb 17, 2011, 11:15 PM
    farazejaz
    first of all deduct profit from sale price
    A sale price =6000-(15%of 6000)=(6000-900)=5100
    B =3500-(12%0f3500)=3080
    now adjust maketing and selling costs
    A =5100-750=4350
    b=3080-550=2530
    now this is the joint cost at split off point absorbed by each by product hope it helps
  • Feb 17, 2011, 11:18 PM
    farazejaz
    sorry did not look at manufacturing costs after separation they will b adjusted too
    so
    A =5100-1100-750=3250
    B=3080-900-550=1630

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