QUESTION 5: JOINT COST AND BY-PRODUCT COSTS An international designer produces three (3) jewellery designer items using a joint process. Total joint costs amount to R650 000. The three products are A, B and C. the output details are as follows: Product A 120 units Product B 108 units Product C 112 units Each product can be sold at the split-off point. The sales values at the split-off point are as follows: Product A R2 500 per unit Product B R2 000 per unit Product C R2 225 per unit Alternatively, further processing or each individual product can be undertaken to produce an enhanced product thus: Further processing Sales value after further costs processing Enhanced product A Enhanced product B Enhanced product C R400 per unit R380 per unit R2 850 per unit R2 500 per unit R350 per unit R2 750 per unit Required: Prepare a statement of profit or loss for the company if all three products are processed further and then sold. Assume that there is no opening or closing inventory. It is the company's policy to allocate joint costs to the products using the market value at the split-off point. (Note: round off all amounts to the nearest R1).

QUESTION 5: JOINT COST AND BY-PRODUCT COSTS An international designer produces three (3) jewellery designer items using a joint process. Total joint costs amount to R650 000. The three products are A, B and C. the output details are as follows: Product A 120 units Product B 108 units Product C 112 units Each product can be sold at the split-off point. The sales values at the split-off point are as follows: Product A R2 500 per unit Product B R2 000 per unit Product C R2 225 per unit Alternatively, further processing or each individual product can be undertaken to produce an enhanced product thus: Further processing Sales value after further costs processing Enhanced product A Enhanced product B Enhanced product C R400 per unit R380 per unit R2 850 per unit R2 500 per unit R350 per unit R2 750 per unit Required: Prepare a statement of profit or loss for the company if all three products are processed further and then sold. Assume that there is no opening or closing inventory. It is the company's policy to allocate joint costs to the products using the market value at the split-off point. (Note: round off all amounts to the nearest R1).

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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Problem 5. Sell-as-is or process further a product-2. Hurricane Corporation produces three products at segregation point, Poh, Taeh, and Toh. These products could be processed further then later sold at higher sales value. The total joint cost in manufacturing these three products was P3 million. The data below were made available by the accounting and production personnel: Taeh 40,000 units P 100 Poh 10,000 units P 80 90 Toh 50,000 units P 200 Production and sales Unit sales price at split-off point 120 18 Unit sales price after further processing Unit variable costs of subsequent process If product Poh is processed further, an equipment shall be rented at a cost of P12,000. To process further product Taeh an outside contractor will be engaged for an amount of P90,000 because the company has no available space and manpower for its subsequent processing. Product Toh could be subsequently processed by using idle machine and manpower time within the company. The total set-up cost of…
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Peter Company produces four solvents from the same process: A,B,C and D. Joint product costs are P9,000 ( Round to the nearest peso) Product Barrels SP @ Split-Off Pt. Cost to sell @ Split-off Separable Cost Final sales price A 750 P10.00 P6.50 P2.00 P13.50 B 1,000 8.00 4.00 2.50 10.00 C 1,400 11.00 7.00 4.00 15.50 D 2,000 15.00 9.50 4.50 19.50 If Peter Company sells the products after further processing, the following costs to sell will be incurred: A-P2.50 B-P1.00 C-P3.50 D- P6.00 Using a…
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Sunland Inc. produces three separate products from a common process costing $100,100. Each of the products can be sold at the split- off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period. Product 10 Product 12 Product 14 (c) Product Your answer is partially correct. Product 10 Product 12 Product 14 $ Sales Value at Split-Off Point $59,700 $ 15,800 $ 55,400 Calculate incremental profit/(loss) and determine which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Incremental profit (loss) Cost to Process Further eTextbook and Media $100,100 30,800 149,700 Sales Value after Further Processing $191,000 34,700 Decision 214,000 Should be processed further Should be sold at the split-off point Should be processed further Assistance Used