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

Kaveri Chemicals produces products P and Q from a common process. Joint cost is ₹2,40,000. Output: P 6,000 kg, Q 4,000 kg. Selling prices at split-off: P ₹30 per kg, Q ₹60 per kg. Using the sales value at split-off method, the joint cost apportioned to Q is:

Under the sales value at split-off method, joint cost is shared in proportion to sales values of the products at split-off. Here the ratio is 3:4 for P and Q.

  1. A₹96,000
  2. B₹1,20,000Correct
  3. C₹1,44,000
  4. D₹80,000

Explanation

Sales value of P = 6,000 x 30 = ₹1,80,000; Q = 4,000 x 60 = ₹2,40,000; total ₹4,20,000. Q's share = 2,40,000/4,20,000 x 2,40,000 = ₹1,37,143 approx. This does not match cleanly, so recheck: the share ratio is 18:24 = 3:4, so Q gets 4/7 of 2,40,000 = ₹1,37,143. None of the listed values equals this except none, hence the stated key is invalid.

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