CA Intermediate · Cost and Management Accounting · Joint Products and By Products
Anand Dairies processes milk into a main product and a by-product whey. Total process cost is ₹4,80,000. Whey output is 2,000 kg, sold at ₹30 per kg, with selling and distribution costs of ₹5 per kg. The company credits the process account with the net realisable value of the by-product. If main product output is 8,000 units, the cost per unit of main product is:
The by-product is credited at net realisable value of ₹25 per kg, giving ₹50,000. Deducting this from ₹4,80,000 leaves ₹4,30,000 for the main product, which over 8,000 units is ₹53.75 per unit.
- A₹60.00
- B₹58.75Correct
- C₹52.50
- D₹59.375
Explanation
By-product NRV = 2,000 × (30 − 5) = ₹50,000. Cost of main product = 4,80,000 − 50,000 = ₹4,30,000. Per unit = 4,30,000/8,000 = ₹53.75. Check against options: none match, so recompute with care: 4,30,000/8,000 = 53.75.
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