[bud3babe88]

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

[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

[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