valuation of by products

in this question, first, we should determine the cost of by product at the stage of separation:-

Procedings from sale = 1000*20 = 20000

cost to complete the by-product = 2000+3000  = 5000

reasonable profit = 2000

estimated cost at the stage of separation =  20000-5000 = 15000

now Rs.15000 are to be deducted from the combined cost (i.e. 230000) in order to get the combined cost of product X and Y.

= 230000-15000 = 205000.

the combined cost of joint products (X & Y) can be aportioned to the joint product in their sale vale ratio.

sale value of X = 4000*60 = 240000

sale value of Y = 3000*40 = 12000

ratio between two = 2:1

aportionment of combined cost:

to X = 205000/3*2 = 136667

to Y = 205000/3*1 = 68333

closing stock:

X = 136667 / 4000*500 = 17083

Y = 68333 / 3000 *100 = 2278