Frutti-Tutti Ltd. Manufactures 2 joint products. Both products require additional processing beyond the split-off point. There were no opening inventories at 1 Jan 2011. The following information relates to the month of Jan:
Juizer Pulper
Production (units) 250,000 150,000
Sales (units) 170,000 85,000
Closing inventory (units) 80,000 65,000
Selling price per units $35 $28
Additional processing costs $1,150,000 $980,000
Total joint processing costs for Jan were $4,500,000. The closing inventories are finished goods that are ready for sale.
Required:
1. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the physical method.
2. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the net realisable value method.
3. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the constant gross margin method.
4. “Pulper” could be processed further into “Fertilyzer” for an additional cost of $8.00 per unit. “Fertilyzer” would sell for $37.00 per unit. Should the company produce “Fertilyzer”? Show the necessary computation to justify your decision.
Juizer Pulper
Production (units) 250,000 150,000
Sales (units) 170,000 85,000
Closing inventory (units) 80,000 65,000
Selling price per units $35 $28
Additional processing costs $1,150,000 $980,000
Total joint processing costs for Jan were $4,500,000. The closing inventories are finished goods that are ready for sale.
Required:
1. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the physical method.
2. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the net realisable value method.
3. Determine the cost of the ending inventories of each of the products as at 31 Jan 2011 using the constant gross margin method.
4. “Pulper” could be processed further into “Fertilyzer” for an additional cost of $8.00 per unit. “Fertilyzer” would sell for $37.00 per unit. Should the company produce “Fertilyzer”? Show the necessary computation to justify your decision.
