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

Kaveri Foods processes a raw material in a common process costing Rs 2,40,000 and yields 3,000 kg of X and 1,000 kg of Y. Using the physical quantity (weight) method, the joint cost per kg is Rs 60. Y is further processed at Rs 10 per kg and sold at Rs 90 per kg. The profit per kg earned on Y is:

Under the physical quantity method the joint cost is Rs 60 per kg, and adding Rs 10 further processing gives Rs 70 per kg for Y. Selling at Rs 90 leaves a profit of Rs 20 per kg.

  1. ARs 30
  2. BRs 20Correct
  3. CRs 40
  4. DRs 10

Explanation

Joint cost per kg = 2,40,000/4,000 = Rs 60. Total cost of Y per kg = 60 + 10 = Rs 70. Profit = 90 - 70 = Rs 20. Rs 30 ignores further processing cost; Rs 10 deducts it twice.

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