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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › by-product with gross product
Hi my Dear tutor, I have a question
Two joint products A and B are produced in a process. Data for the process for the last period are as follows:
———————————————————————————A————————-B
—————————————————————————-Tonnes——————-Tonnes
Sales———————————————————————480————————320
Production—————————————————————-600———————-400
Common production cost in the period were $12000.There was no opening inventory. Both products had a gross profit margin of 40%.Common production costs were apportioned on a physical basis
What was the gross for product A in the period?
total physical measurement=600+400=1000
apportioned cost for A=600/1000*12000=7200
the rest i just looked at the answer behind a book it was.
7200*480/600=5760-did not understand this part, need explanation,please
You have mistyped the question (or there is a typing mistake in your book), because asking ‘what was the gross for product A’ does not mean anything.
Since the cost of the production for A was 7,200, the cost per unit for A is 7,200/600.
Since 480 units were sold, then the cost of the sales is 7,200/600 x 480 = 5,760
If the question wanted to know the gross sales, then since 5,760 is the cost of sales and since there is a gross profit margin of 40%, then the sales revenue will have been 5,760 x 100/60 = $9,600
It asks gross profit,i just mistyped.
I assume you are now clear?