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Q.3.b. Jackson Company manufactures one main product and two by-products, A and B. For April, the following data are available: By- Product Main Product Total Sales Rs. 6,000 Rs. 1,100 Rs. 75,000 Rs. 3,500 Rs. 84,500 Rs. 13,500 Manufacturing cost after separation Marketing and administrative expenses Manufacturing cost before separation Rs. 11,500 Rs. 900 6,000 750 550 7,300 37,500 Profit allowed for A and B is 15% and 12%, respectively. Required: 1. Calculate manufacturing cost before separation for by-products A and B, using the market value (reversal cost) method. 2. Prepare an income statement, detailing sales and costs for each product. 3. Comment on the reliability of costing by-products A and B in relation to the assignment of balance joint cost on main product.

Q.3.b. Jackson Company manufactures one main product and two by-products, A and B. For April, the following data are available: By- Product Main Product Total Sales Rs. 6,000 Rs. 1,100 Rs. 75,000 Rs. 3,500 Rs. 84,500 Rs. 13,500 Manufacturing cost after separation Marketing and administrative expenses Manufacturing cost before separation Rs. 11,500 Rs. 900 6,000 750 550 7,300 37,500 Profit allowed for A and B is 15% and 12%, respectively. Required: 1. Calculate manufacturing cost before separation for by-products A and B, using the market value (reversal cost) method. 2. Prepare an income statement, detailing sales and costs for each product. 3. Comment on the reliability of costing by-products A and B in relation to the assignment of balance joint cost on main product.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

 Jackson Company manufactures one main product and two by-products, A and B. For April, the

following data are available:

Main

 By- Product

 Product

 A B

 

Total

Sales

 Rs. 75,000

Rs. 6,000

Rs. 3,500 Rs. 84,500

Manufacturing cost after separation

 Rs. 11,500

Rs. 1,100

Rs. 900 Rs. 13,500

Marketing and administrative expenses

 6,000 750

 550 7,300

Manufacturing cost before separation

 37,500

Profit allowed for A and B is 15% and 12%, respectively.

Required:

1. Calculate manufacturing cost before separation for by-products A and B, using the market value

(reversal cost) method.

2. Prepare an income statement, detailing sales and costs for each product.

3. Comment on the reliability of costing by-products A and B in relation to the assignment of

balance joint cost on main product.

Q.3.b. Jackson Company manufactures one main product and two by-products, A and B. For April, the following data are available: Main By- Product Product A Total Rs. 84,500 Rs. 75,000 Rs. 11,500 6,000 Rs. 6,000 Rs. 1,100 Sales Rs. 3,500 Manufacturing cost after separation Marketing and administrative expenses Manufacturing cost before separation Rs. 13,500 7,300 Rs. 900 750 550 37,500 Profit allowed for A and B is 15% and 12%, respectively. Required: 1. Calculate manufacturing cost before separation for by-products A and B, using the market value (reversal cost) method. 2. Prepare an income statement, detailing sales and costs for each product. 3. Comment on the reliability of costing by-products A and B in relation to the assignment of balance joint cost on main product.
Transcribed Image Text:Q.3.b. Jackson Company manufactures one main product and two by-products, A and B. For April, the following data are available: Main By- Product Product A Total Rs. 84,500 Rs. 75,000 Rs. 11,500 6,000 Rs. 6,000 Rs. 1,100 Sales Rs. 3,500 Manufacturing cost after separation Marketing and administrative expenses Manufacturing cost before separation Rs. 13,500 7,300 Rs. 900 750 550 37,500 Profit allowed for A and B is 15% and 12%, respectively. Required: 1. Calculate manufacturing cost before separation for by-products A and B, using the market value (reversal cost) method. 2. Prepare an income statement, detailing sales and costs for each product. 3. Comment on the reliability of costing by-products A and B in relation to the assignment of balance joint cost on main product.
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