J-M Company uses a joint process costing $15,000 to produce three main products. The company had no beginning inventory. Its current period operation data follow: $\begin{array}{lccccc}
&\text { Units }&\text {Sales Value}&\text {Separable }&\text {Sales Value After }&\text {Units }\
\text { Product}&\text { Produced }&\text {at Split-Off }&\text {Costs }&\text {Further Processing }&\text {Sold }\
\hline S & 500 & \$ 5,000 & \$ 500 & \$ 7,000 & 400 \
T & 450 & 6,000 & 650 & 9,000 & 300 \
R & 300 & 9,000 & 700 & 10,000 & 250
\end{array}$ If J-M uses the physical output method and performs further processing after the split-off point, what is the ending inventory value for product R? Note: the sales values above are based on units produced.
A) $717
B) $600
C) $860
D) $720

Question

Quizplus · Accepted Answer

The correct answer is A.The ending inventory value for product R is $717. This is calculated as follows:Ending inventory value = (Units produced - Units sold) x Sales value after further processing= (300 - 250) x $10,000= 50 x $10,000= $500,000However, since the company uses the physical output method, the ending inventory value is adjusted based on the proportion of units produced to units sold. In this case, the proportion is 300/250 = 1.2.Therefore, the ending inventory value for product R is $500,000 x 1.2 = $600,000.

J-M Company Uses a Joint Process Costing $15,000 to Produce