Dept. One Process Cost = $120,000 on 110,000 lbs.

1
Stage 1 Forward Path 1 Draw chart, Identify the
total process, label the traceable costs, and
determine the NRV by product.
Dept. Four Process Cost 23,660 for 46,200lbs.
NRV 231,000 At market P 5.00 Q 46,200
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
60
30
NRV 23,760 At market P 1.20 Q 19,800
b
Dept. One Process Cost 120,000 on 110,000 lbs.
40
NRV 480,000 At market P 12.00 Q 40,000
g
Dept. Three Process Cost 165,000 for 44,000
lbs.
4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000
2
Stage 2 Backward Path Objective Find NRV at
first split off from the NRV at Market for all
the products.Why This the the basis by which
joint costs are allocated.
NRV 231,000 - 23,660 207,340 at this point
Dept. Four Process Cost 23,660 for 46,200lbs.
NRV 223,000 - 38,000 185,000 at this point
NRV 207,340 15,660 223,000 at this point
NRV 231,000 At market P 5.00 Q 46,200
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
30
60
NRV 23,760 At market P 1.20 Q 19,800
b
Dept. One Process Cost 120,000 on 110,000 lbs.
NRV 23,760 - 8,100 15,660 at this point
NRV 185,000 315,000 500,000 at this point
40
NRV 480,000 At market P 12.00 Q 40,000
g
Dept. Three Process Cost 165,000 for 44,000
lbs.
NRV 480,000 - 165,000 315,000 at this point
4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000
3
Stage 3 Forward Path 2 Objective Find the per
unit product cost for each branch.Joint costs
allocated to product g
Dept. Four Process Cost 23,660 for 46,200lbs.
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
30
60
b
Dept. One Process Cost 120,000 on 110,000 lbs.
For product g Joint Cost Allocated
315,000/500,000 120,000 75,600 Total
Product Cost joint cost traceable cost
75,600 165,000 240,600 Per Unit Cost
240,600/40,000 6.015/unit
NRV 185,000 315,000 500,000 at this point
40
NRV 480,000 At market P 12.00 Q 40,000 C
6.015
g
Dept. Three Process Cost 165,000 for 44,000
lbs.
NRV 480,000 - 165,000 315,000 at this point
4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000
4
Stage 3 Forward Path 2 Objective Find the per
unit product cost for each branch.Joint costs
allocated to product a b where b is a by product

• Assumptions
• No joint costs will be allocated to a by product
• A byproduct credit should be given to the main
  product

Dept. Four Process Cost 23,660 for 46,200lbs.
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
30
60
NRV 23,760 At market P 1.20 Q 19,800 C
0
b
Dept. One Process Cost 120,000 on 110,000 lbs.
For product b Joint Cost Allocated
0 Traceable Cost Allocated 0 ? there is only
SGA which is a period, and not a product
cost Total Product Cost 0 Per Unit Cost
0/unit
40
g
Dept. Three Process Cost 165,000 for 44,000
lbs.
4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000
5
Stage 3 Forward Path 2 Objective Find the per
unit product cost for each branch.Joint costs
allocated to product a b where b is a by product
Dept. Four Process Cost 23,660 for 46,200lbs.
NRV 231,000 At market P 5.00 Q 46,200 C
1.96
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
30
60
b
For product a Joint Cost Allocated 185/500
120,000 44,000 Traceable Cost Allocated
38,000 23,660 61,660 Less Byproduct Credit
15,660 Total Product Cost 44,000 61,560
- 15,660 90,400 Per Unit Cost
90,400/46,200 1.96/unit
Dept. One Process Cost 120,000 on 110,000 lbs.
40
g
Dept. Three Process Cost 165,000 for 44,000
lbs.

• Assumptions
• No joint costs will be allocated to a by product
• A byproduct credit should be given to the main
  product

4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000
6
Per Unit Costs
Dept. Four Process Cost 23,660 for 46,200lbs.
NRV 231,000 At market P 5.00 Q 46,200 C
1.96
a
70
SGA 8,100 for 19,800 lbs.
Dept. Two Process Cost 38,000 for 66,000 lbs.
30
60
NRV 23,760 At market P 1.20 Q 19,800 C
0
b
Dept. One Process Cost 120,000 on 110,000 lbs.
40
NRV 480,000 At market P 12.00 Q 40,000 C
6.015
g
Dept. Three Process Cost 165,000 for 44,000
lbs.
4,000 lbs. lost in Dept. Three This is normal
spoilage or of good output 10 of X 4,000
? X 40,000