Reference no: EM132610105

Magnetic Co. produces three products, A, B and C, A and C are joint products, while B is a by-product of A. No joint cost is allocated to the by-product. The production data for the year 2008 were as follows:

a. In Department I, 220,000 kilos of raw materials are processed at a total cost of P240,000. After processing, 60% of the units are transferred to Department II while 40% of the units (now C) are transferred to Department III.

b. In Department II, the materials are processed further at total additional cost of P76,000. On completion of the process, 70% of the units (now A) are transferred to Department IV while the other 30% emerge as B, the by-product, which is sold at P1.20 per kilo. The selling expenses related to B amounted to P16,200.

c. In Department III, C is processed further at total additional cost of P330,000. In this department, a normal loss units of C occurs during processing, which is equal to 10% of the good output. The good output of C is sold at P12 per kilo.

d. In Department IV, A is processed further at total additional cost of P47,320 after which it is ready for sale at P5 per kilo.

Question 1: Market value method is used in allocating joint costs and treating the NRV of by product as an addition to product A sales. Determine how much of the total joint cost of P240,000 is allocated to product A.