CA Intermediate · Cost and Management Accounting · Joint Products and By Products
Sundaram Chemicals runs a common process costing Rs 4,80,000 that yields products A, B and C. Output: A 2,000 kg, B 3,000 kg, C 5,000 kg. Joint costs are apportioned on the physical quantity basis. What is the joint cost allocated to B?
Joint cost allocated to B is Rs 1,44,000. Total output is 10,000 kg, so the physical-quantity rate is Rs 48 per kg, and B's 3,000 kg bears 3,000 times 48. Rs 96,000 would be A's share.
- ARs 1,44,000Correct
- BRs 96,000
- CRs 1,92,000
- DRs 2,40,000
Explanation
Total output = 2,000 + 3,000 + 5,000 = 10,000 kg. Rate = 4,80,000 / 10,000 = Rs 48 per kg. B = 3,000 x 48 = Rs 1,44,000. Rs 96,000 is A's share (2,000 kg), arising from using the wrong product's quantity.
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