Skip to content

CA Intermediate · Cost and Management Accounting · Joint Products and By Products

Ganga Polymers incurs a joint cost of ₹4,00,000 for products M and N, which are both processed further. Further processing costs are ₹1,50,000 for M and ₹50,000 for N. The final sales values are ₹6,00,000 for M and ₹4,00,000 for N. Using the constant gross profit percentage method, what joint cost is allocated to M?

The joint cost allocated to M is ₹2,10,000. The overall gross profit is 40% of total sales of ₹10,00,000, so M's total cost is 60% of ₹6,00,000, or ₹3,60,000. Subtracting M's further processing cost of ₹1,50,000 leaves ₹2,10,000.

  1. A₹1,50,000
  2. B₹2,10,000Correct
  3. C₹2,40,000
  4. D₹3,60,000

Explanation

Total sales = ₹10,00,000. Total cost = 4,00,000 + 2,00,000 = ₹6,00,000, so overall gross profit is ₹4,00,000, or 40%. The cost of M = 60% × 6,00,000 = ₹3,60,000. Joint cost for M = 3,60,000 − 1,50,000 = ₹2,10,000. Option ₹3,60,000 forgets to deduct M's further processing cost.

Did you get it right without looking?

One question tells you little. A timed set on Joint Products and By Products shows your real accuracy, how long you take and where you lose marks.

Practise Joint Products and By ProductsFree diagnostic mock

More Joint Products and By Products questions