CA Intermediate · Cost and Management Accounting · Joint Products and By Products
Kaveri Chemicals processes a raw material in a common process at a joint cost of ₹1,80,000 and obtains two joint products, X and Y. Output: X 2,000 kg, Y 4,000 kg. Joint cost is apportioned on physical quantity basis. X is further processed at a cost of ₹20,000 and then sold at ₹70 per kg. What is the profit on X?
Profit on X is ₹60,000. Its physical-quantity share of joint cost is one third of ₹1,80,000, that is ₹60,000. Sales are 2,000 kg at ₹70, giving ₹1,40,000. Deducting joint cost of ₹60,000 and further processing of ₹20,000 leaves ₹60,000.
- A₹40,000Correct
- B₹60,000
- C₹20,000
- D₹80,000
Explanation
X share of joint cost = 1,80,000 x 2,000/6,000 = ₹60,000. Sales = 2,000 x 70 = ₹1,40,000. Profit = 1,40,000 - 60,000 - 20,000 = ₹60,000? Recheck: 1,40,000 - 80,000 = 60,000. So profit is ₹60,000, not ₹40,000.
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