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

Kaveri Foods processes a raw material into joint products A and B and a by-product C. Joint processing cost is Rs 3,30,000. Sale of C brings Rs 30,000, which is credited to the joint process account (net of its own costs). Output: A 3,000 units, B 2,000 units. Joint cost is apportioned on physical units. What is the cost per unit of B?

The cost per unit of B is Rs 60. The by-product income of Rs 30,000 is deducted from the joint cost of Rs 3,30,000, leaving Rs 3,00,000, which is spread over 5,000 physical units of A and B, giving Rs 60 each.

  1. ARs 60Correct
  2. BRs 66
  3. CRs 72
  4. DRs 55

Explanation

Net joint cost = 3,30,000 - 30,000 = Rs 3,00,000. Total units = 5,000, so cost per unit = Rs 60 for both A and B. Rs 66 results from ignoring the by-product credit (3,30,000/5,000).

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