1)

401 402 403 404

Sales Price/Unit 0.4 0.6 0.7 0.8
Proportion of Sales 0.25 0.35 0.25 0.1
Annual Production 90000 120000 90000 60000
Annual Sales Volume 100000 140000 100000 40000
Residual -10000 -20000 -10000 20000
Revenue 40000 84000 70000 32000

No.2
Total Annual Manufacturing Cost 200,000

Average costing sytem (physical unit costing system)

Annual Relative Allocation of
Joint Products Production Proportion Joint Cost
(Units)
401 90,000 22.50% 45,000
402 120,000 30.00% 60,000
403 90,000 22.50% 45,000
404 60,000 15.00% 30,000
405 40,000 10.00% 20,000
400,000 200,000

Relative Sales Value System

Annual Sales Sales Sales Value
Joint Products Order (units) Price/unit (s) ($)
401 100,000 0.40 40,000
402 140,000 0.60 84,000
403 100,000 0.70 70,000
404 40,000 0.80 32,000
405 20,000 1.00 20,000
400,000 246,000

3)
Revenue Unit Sales Sales Total Sales
(Units) Price/Unit ($) (Revenue) ($)
6000 0.40 2,400

Physical Unit Costing System Relative Sales Value System

Unit Sales Unit Sales
(units) Cost/Unit ($) Total Cost ($) (units)
401 3000 0.50 1,500 3000
 402 3000 0.50 1,500 3000
Total 3,000
Profit (loss) (600)

Helen Barnes should recommend to reject the order because

upon receipt of the order will result in a loss , either when
join calculate cost using the physical units and costing system
using the relative sales value costing system.

4)
Helen Barnes should recommend to receive orders from the toy company, because the
sales value of the by-products can be used to reduce the production costs of rectifiers, and
it would free up inventories.

5
They should use the relative sales value method because it is more accurate for showing the actual value each
product has to the company. The company can then use this to set the price and margins, rather than basing price o
of an average cost.
6
Based on the relative sales value approach costing system, rectifiers 404 has a cost / unit of $ 0.65
With a profit margin of 10 % , the rectifiers can be sold at a price of 404 ( 1.1 x $ 0.65 ) = $ 0.715

They would have to produce more to meet the Governement's order, and they already produce enough to meet
demand, which sell at $.80 each. Unitron should not sign this contract as it would increase storage costs and decrea
capacity for other more profitable goods. Or they should negotiate a higher price to offset the costs and opportunit
costs.
 405
1
0.05
40000
20000
20000
20000

Product Annual Sales

Cost/unit (s) 401 100,000.00
0.50 402 140,000.00
0.50 403 100,000.00
0.50 404 40,000.00
0.50 405 20,000.00
0.50 400,000.00

255800
Relative Allocation of Gross Margin 179060
Proportion Joint Cost Cost/unit (s)
16.26% 32,520 0.33 0.19
34.15% 68,293 0.49 0.19
28.46% 56,911 0.57 0.19
13.01% 26,016 0.65 0.19
8.13% 16,260 0.81 0.19
200,000

Relative Sales Value System

Cost/Unit ($) Total Cost ($)

0.33 975.61
 0.49 1,463.41
2,439.02
(39.02)

showing the actual value each

d margins, rather than basing price off

ost / unit of $ 0.65

$ 0.65 ) = $ 0.715

already produce enough to meet

ld increase storage costs and decrease
e to offset the costs and opportunity
Annual ProduDiffrence
90,000.00 (10,000.00)
120,000.00 (20,000.00)
90,000.00 (10,000.00)
60,000.00 20,000.00
40,000.00 20,000.00
400,000.00