Joint products and cost measurement techniques: Beams — joint costs

Context

Bois de Valbrune SA (a fictitious entity) operates a sawmill and a DIY store. At the sawmill, sawing logs simultaneously produces beams and planks, two joint products sold to carpenters and timber merchants, as well as sawdust, sold to a pellet manufacturer. At the store, thousands of rapidly changing items are sold in two departments. You are preparing the financial statements for the year ended 31 December 20X3.

Assignment

Joint production and cost measurement techniques workpaper.

Purpose of the workpaper

Allocate the common costs between joint products on a rational and consistent basis after deducting the net realisable value of an immaterial by-product, then determine the cost of inventories under the retail method or the standard cost method and assess how closely the result approximates cost.

Questions of the file covered by this workpaper

• How do you analyse the sawing process and the basis for allocating joint costs?
• Calculate the net realisable value of the sawdust and the cost of the beams and planks.
• Can the retail method be used at the store and with which percentage?
• Calculate the cost of the store's inventories by department and in total.

• ScheduleSawmill management accounting reportOpen
• MemoSawmill accounting policy memoOpen
• ContractSawdust sales agreementOpen
• ScheduleStore inventory count at selling pricesOpen
• DocumentInsurer's certificateOpen