Alma, Inc Has Joint Process That Produces Five Different Products at at the Split-Off

question 68

Essay

Alma, Inc. has joint process that produces five different products at the split-off point. The joint cost of producing these products is $500. Three of these products are processed further (A, D, and E). Two of these products are not processed further (B and C). Products A, C, and D are main products; Products B and E are by-products.
For product costing purposes, the cost reduction method recognized at the time of production is used for by-product B, and the other income method recognized at the time of sale is used for by-product E (Z).
Product Product After Sales Price Separable Sales Price After
at Split-Off Further Processing at Split-Off Costs Further Processing
A W $200 $120 $400
B -- 50 -- --
C -- 400 -- --
D Y 100 80 320
E Z 10 20 50
a)At what cost will a unit of B be carried in inventory?
b)At what cost will a unit of E be carried in inventory?
c)At what cost will a unit of Z be carried in inventory?
d)How much joint cost will be allocated to product A, if the basis is sales value at split-off point?

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Definitions:

Open Market Sale

The sale of government bonds by the central bank to reduce the money supply in the economy.

Money Supply

The complete sum of available financial resources in an economy, including cash, coins, and the funds available in checking and savings accounts, at a particular instant.

Inflationary Tendencies

The general tendencies or trends towards increasing prices and diminishing purchasing power over time within an economy.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and ensuring stability of the financial system.