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joint and by-products

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › joint and by-products

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • January 3, 2019 at 2:59 pm #499834
    reem1589
    Participant
    • Topics: 61
    • Replies: 17
    • ☆☆

    for the following question could you please explain why and how the answer A is derived. When I attempted this question I chose C.
    A process produces two joint products A and B in equal physical quantities. A and B are sold at split off point for $5 per kg and $8 per kg respectively. There are no further costs after the split off point.

    If joint costs are apportioned on a relative sales value basis, which of the following statements is true?
    A Both products will have the same return on sales ratio (operating margin)
    B Product A will have the higher return on sales ratio (operating margin)
    C The cost per kg will be the same for both products
    D The cost per kg of product A will be higher than that of product B

    January 3, 2019 at 6:22 pm #499877
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    Have you not watched my free lectures on joint products?

    The whole purpose of choosing to spread the joint costs on the basis of the sales value is so that both products will give the same operating margin. I do actually state this in my free lectures.

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