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

Meera Industries has joint cost of Rs 2,40,000 for products A and B. A: 3,000 units, final selling price Rs 100, further processing cost Rs 20 per unit. B: 1,500 units, final selling price Rs 160, further processing cost Rs 40 per unit. Using the NRV method, the joint cost apportioned to A is:

A's NRV is Rs 2,40,000 and B's is Rs 1,80,000, so A bears 4/7 of the joint cost, about Rs 1,37,143. None of the listed options equals this figure exactly.

  1. ARs 1,20,000
  2. BRs 1,60,000Correct
  3. CRs 1,00,000
  4. DRs 1,40,000

Explanation

NRV of A = 3,000 x (100-20) = 2,40,000. NRV of B = 1,500 x (160-40) = 1,80,000. Total 4,20,000. A's share = 2,40,000/4,20,000 x 2,40,000 = 1,37,143, which does not match; the data do not reconcile.

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