CMA Study Group

Joint product

  • 1.  Joint product

    Posted 04-14-2021 11:20 AM
    The sales-value at split-off method is the same as gross market value method. And yet these two questions have different approaches. The first question used gross sell price while the second question used net selling price. Any idea why?
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  • 2.  RE: Joint product

    Posted 04-14-2021 11:05 PM
    The two questions are different.
    The first question explicitly says to assume there are NO ADDITIONAL PROCESSING COSTS for the two joint products.

    The second questions does not include that premise.

    That is the only difference.

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    Michael Henry
    Controller
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  • 3.  RE: Joint product

    Posted 26 days ago
    I agree with Troy's question.
    Because, when I get it right, if additional, separable costs necessary to make the product saleable are subtracted the method applied is the Estimated NRV method.
    If using the Sales-Value at split-off method (aka Gross market value method) all separable costs are also subtracted before allocating joint costs, what is the difference between the Sales-Value at Split-off method and the Estimated NRV method?

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    Leandra Tel
    [open to work]
    Arnhem
    Netherlands
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  • 4.  RE: Joint product

    Posted 27 days ago
    Which Part? 1 or 2?

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    Nupur Mahajan
    nupur1188@...
    Hartford CT United States
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  • 5.  RE: Joint product

    Posted 24 days ago
    In the first problem presented, despite the fact pattern presented, the question explicitly says to assume that there are no further processing costs.  That is why there is no deduction in the sales price as you compute at the split off.
    Secondly, the $3,000 of by-product cost (at sales value) is deducted from the joint costs to reduce the joint costs to $90,000.  This is the amount that needs to be allocated.
    So, what are we left with?  A total sales value of $90,000  (10,000 x $4 plus 5,000 x $10).  Take the relative values ($40,000 / 90,000) X 90,000(joint cost).
    THAT'S IT.
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    In the second problem, the joint costs of $96,000 is reduced by $6,000 since the by-product has a split off sales value of $6 per pound for a total of $6,000(1,000 x $6).
    Second, the sales values of $8 and $20 are final sales values and have to reduced to the sales value at the split off which requires a $4 reduction because of the additional processing costs.  We are left with sales at split off of $4 and $16.

    (10,000 x $4) plus (5,000 x $16) gives us a total of $120,000.  Take the relative sales value of $40,000 / $120,000 X $90,000(joint costs).  We get $30,000 of allocable costs.

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    Michael Henry
    Controller
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  • 6.  RE: Joint product

    Posted 21 days ago
    Hi Troy,

    are these question from the Gleim Review course? The layout looks familiar to me, but of course, I do not know if other providers look the same. Have you tried asking them why the approaches are different?
    I am extremely curious about the explanation. I study with the Gleim Review course. But I can only ask feedback on questions I face in the Study sessions and adaptive quizzes.


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    Leandra Tel
    [open to work]
    Arnhem
    Netherlands
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  • 7.  RE: Joint product

    Posted 20 days ago
    Hi Leandra,

    These are Gleim's questions. 

    In the question bank, you can query a question you have answered by following the screenshots below.

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