With reference to the inputs given for one of the operating segments of VHIL namely 'Metal Cast Division', calculate the value of closing stock as…

Calculation of value of stocks: (1) Calculation of NRV of By-product Selling price of by-product 1,000 units 24,000 Less: Separate processing charges of by-product x 24/unit (5,000) Net realisable value of by-product 19,000 (2) Calculation of cost of conversion for allocation between joint products Main Product 1 (MP1) and Main Product 2 (MP2) Raw material 6,40,000 Direct Labour 3,20,000 Direct Expenses 1,56,000 Fixed overhead 1,90,000 Less: NRV of by-product (See calculation 1) 19,000 Sale value of scrap 9,600 (28,600) Joint cost to be allocated between MP1 and MP2 12,47,400 (3) Determination of "basis for allocation" and allocation of joint cost to MP1 and MP2 MP I MP 2 Output in units (a) 6,000 3,200 Sales price per unit (b) 320 200 Sales value (a x b) 19,20,000 6,40,000 Ratio of allocation 3 1 Joint cost of 12,47,400 allocated in the ratio of 3:1 (c) 9,35,550 3,11,850 Cost per unit [c/a] 155.925 97.453125 (4) Determination of value of closing stock of MP1 and MP2 Particulars MP I MP 2 Closing stock in units 500 units 300 units Cost per unit 155.925 97.453125 Value of closing stock 77,962.50 29,235.9375 Total closing stock of finished goods = 77,962.50 + 29,235.94 = 1,07,198.44 Closing stock of raw material Since selling price of both finished goods are more than their cost price, it is implied that NRV of Finished Goods would be more than the cost. Hence, raw materials will be valued at cost. Closing stock of raw material = 1,400 units x 70 = 98,000 Total closing stock of finished goods = 77,962.50 +29,235.94 = 1,07,198.44 Total closing stock of raw material = 98,000.00 Grand total of all closing stock = 2,05,198.44