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: Units Sales Value Separable Sales Value After Units
Product Produced at Split-Off Costs Further Processing Sold
S 500 $5,000 $500 $ 7,000 400
T 450 6,000 650 9,000 300
R 300 9,000 700 10,000 250
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?

Question

Quizplus · Accepted Answer

The physical output method allocates joint costs based on the proportion of total units produced. Product R's ending inventory is 50 units (300 produced - 250 sold). The joint cost allocated to R is ($15,000 * (300/1250)) = $3,600. The cost per unit is $3,600/300 = $12. The ending inventory value is 50 units * $12 = $600.

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