CA Intermediate · Cost and Management Accounting · Joint Products and By Products
Sundaram Chemicals produces products P and Q jointly. Joint cost is ₹3,60,000. Output is P 6,000 kg and Q 4,000 kg. Selling price at split-off is ₹40 per kg for P and ₹60 per kg for Q. Under the sales value at split-off method, the joint cost apportioned to Q is:
The joint cost apportioned to Q is ₹1,80,000. The sales values at split-off are equal at ₹2,40,000 each, so each product bears half of the ₹3,60,000 joint cost. Apportioning by physical quantity would give a different, incorrect figure.
- A₹1,44,000
- B₹1,80,000Correct
- C₹2,16,000
- D₹1,50,000
Explanation
Sales value of P = 6,000 x 40 = ₹2,40,000. Sales value of Q = 4,000 x 60 = ₹2,40,000. Total = ₹4,80,000, so Q's share is 50% of ₹3,60,000 = ₹1,80,000. Using physical units (40%) would wrongly give ₹1,44,000.
Did you get it right without looking?
One question tells you little. A timed set on Joint Products and By Products shows your real accuracy, how long you take and where you lose marks.
More Joint Products and By Products questions
- Under the constant gross margin percentage method of apportioning joint costs, the joint cost is allocated so that:
- Ganga Dairy produces a by-product whose sales are Rs 30,000, with selling and distribution expenses of Rs 4,000. Under the commonly used tre…
- In a chemical plant, a single process yields products P and Q jointly. Which of the following costs is, by definition, a 'joint cost' in thi…
- In a chemical plant, a single process yields joint products P and Q. At the split-off point, the joint cost is apportioned using the net rea…
- In cost accounting, the point in a joint production process at which the individual products first become separately identifiable is called …
- A by-product of a dairy firm is sold for ₹45,000. Its selling and distribution expenses are ₹5,000. The firm follows the practice of treatin…