wanna go back on a article
read the physical units not that we've covered just because this question here
is derived from that article it might make sense to read their introduction to
join cost
first so we didn't allow us to Charles we took
we took the one hundred thousand dollars up a joint costing be allocated it
using because go units method so that the cost was allocated
the 66,000 667 for chemical a
3300 at thirty 3
for chemical be and basically what happened was
after we calculated a salesman we subtracted be used
our kids join costs the income was
,000 333
for chemical and a but on be it showed a loss %uh
negative that negative 3,333 so if anyone
what's a look at each of these they would say what chemically make sense to
courteous or to you were to actually
split bar or to take raw materials and split it into chemical a.m. in Seoul
chemical a
but it didn't make any sense to actually produce chemical be because
we're not making money on it but of course we're making money on chemical
A&B earl's
be when have split the raw material it's just that we allocated
reallocated be joined costs use the air because call you know it's not good
which yielded a loss and if we use
a deferred map it in my yielding come into course
we want the method that yields income because whenever we splits
raw material it's you three our core products
we know thats each product is going to yield an com
earl's me when have split it and it does
there's joint products so we need a method
that's going to show income for chemical a
and income for chemical be so let's go ahead
and actually actually do this question are you here
for the relative sales not that national also say that be
the physical units map it is actually not
the best method to use just because if you're
major units are not the same like if you're not
if you don't have leaders for a and leaders for be then you can't even do
the physical units method because they have to be in the same yet so that the
being the same kilograms are same pounds
or whatever the relative sales not that doesn't require that
because we're gonna actually allocates new joint cost
you seen using the sales and you'll see what I'm talking about rate you're so
we're all looking a hundred thousand dollars because it's so the great here
the joint cost is one hundred thousand dollars
and we have a hundred thousand leaders a day which we produced by exploiting arm
and fifty thousand leaders are be so this is basically wrote but for school
waiting the raw material into A&B
and we can sell it for ninety cents a liter an sixty-something leaders
to rate away what stuck with the sale one chemical and be
so we have ninety ninety cents times than 100,000
is 90,000 per area in for be
it's going to be 60 cents times but it doesn't which is 30,000 so
in total we have a hundred and twenty thousand dollars
%uh sales so how we're gonna I will keep this hundred thousand dollars the
joint costs miss it said this is the joint cost
how we're gonna do this is by
her radiant and then taking a hundred thousand dollars in allocating at
between a indeed so we're going to take ninety thousand
dollars the best sales and divided by
the total sales
since this is your relatives sales method
which will yield percentage of 75 percent
and will have chemical BAE which is
,000 sales divided by the total
sales which is 25 percent make sure that it always adds up to 100 percent
because it always must when you are when you're doing a curry
shin so basically what we're gonna be doing is we're going to be
what's I'm 25 percent times a hundred thousand
not going to be the joint cost for chemical be which will be
twenty-five thousand dollars allocated to be
and of course seventy-five thousand dollars will be allocated
to chemical a because we just take the 75 percent will spy by a hundred
thousand
and word on so lets you now what you income is going to be
from each chemical if we were to like sell it
so we have a hundred thousand meter the bay times ninety cents
so the revenue from not going to be ninety thousand and
the cost is 75,000
so income will be 15 yr
thousand dollars on chemical a
now for chemical be it's going to be an
,000 leaders times 60 cents which is thirty thousand or the Broker near
and the amount allocated to be for the cost was twenty five thousand
so this time we actually do show income
%uh five thousand dollars we're just starting to make sense because obviously
if we split a raw material in to YouTube products
they should both be profitable and they both should earn income so this
is one method that we can use because they both end up with
income were crop it for each I joint
products so this is how you would prefer the road that still smoke good
and in the next one we're gonna be performing
at the matter I and I can't speak not realizable
value methods I'll see you guys in the next one. Thanks for visit..
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