Reference no: EM132860758
Question - Lester Company processes a raw material called Wizon until the split-off point were it becomes products X, Y, and Z. Product X is sold at the split-off point with no further processing. Products Y and Z require further processing to finish them before they can be sold. The following is a summary of costs and other related data for the year ending December 31, 2020.
Joint costs before the splitoff point $240,000
Separable costs after splitoff to complete "Y" 132,000
Separable costs after splitoff to complete "Z" 228,000
Product X Y Z
Litres processed 60,000 60,000 120,000
Selling price per litre $1.50 $3.20 $3.15
There were no inventories on hand January 1, 2020, and there was no Wizon on hand on December 31, 2020. All units of X, Y, and Z on hand at year end were complete as to processing.
REQUIRED -
1. Allocate the total joint costs to products X, Y, and Z using the net realizable value method.
2. Calculate the full cost of producing one unit of each of X, Y, and Z.
3. For each product (X, Y, and Z) calculate the dollar value of the cost of goods sold for 2020 and the ending inventory dollar value at December 31, 2020. Assume that 40,000 units of X, 60,000 units of Y, and 90,000 units of Z were sold during 2020.