Modern Mills Ltd. manufactures certain grades of products known as M, B1 and B2. In course of manufacture of Product M (main product), by-products-B1 and B, emerge. The joint expenses of manufacture amount to $ 2,37,600. All the three products are processed further after separation and sold as per details given below : Product-M (Ву-products) Product B1 Product B2 $ 2,00,000 Sales Cost incurred after separation Profit as percentage on sales Total fixed selling expenses are 10% of total cost of sales which are apportioned to the three products in the ratio of 20 : 40 : 40. 1,20,000 15,000 20 80,000 10,000 15 2$ 20,000 25 Required : (i) Prepare a statement showing the apportionment of joint costs to the products (M, B1 and B2). (ii) If the Product B1 (by-product) is not subject to further processing and is sold at the point of separation, for which there is a market at $ 1,00,440 without incurring any selling expenses, would you advise its disposal at this stage ? Show the workings.
Modern Mills Ltd. manufactures certain grades of products known as M, B1 and B2. In course of manufacture of Product M (main product), by-products-B1 and B, emerge. The joint expenses of manufacture amount to $ 2,37,600. All the three products are processed further after separation and sold as per details given below : Product-M (Ву-products) Product B1 Product B2 $ 2,00,000 Sales Cost incurred after separation Profit as percentage on sales Total fixed selling expenses are 10% of total cost of sales which are apportioned to the three products in the ratio of 20 : 40 : 40. 1,20,000 15,000 20 80,000 10,000 15 2$ 20,000 25 Required : (i) Prepare a statement showing the apportionment of joint costs to the products (M, B1 and B2). (ii) If the Product B1 (by-product) is not subject to further processing and is sold at the point of separation, for which there is a market at $ 1,00,440 without incurring any selling expenses, would you advise its disposal at this stage ? Show the workings.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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