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
Ask the Tutor ACCA MA
joint and by-products
7y ago#1Have 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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