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Joint costing

IIzabel7y ago
Hello sir, If sales - 2000 , production - 4000 and sales price is 10/unit - A If sales - 2000 , production - 2000 and sales price is 12 /unit - B with a joint cost of 10000 what is the total profit on the basis of units produced basis ? Cost / unit = 10000/ 6000= 1.67 Therefore Profit of A - 20000 - 6680 = 13320 Profit of B - 24000 - 3340= 20660 This if done on the basis of sales value of production Cost of A = 40000/64000 X 10000 = 6250 Cost of B = 24000/64000 X 10000= 3750 Profit = 20000 - 6250 = 13750 profit of B = 240000 -3750 = 20250 But i read somewhere that irrespective of the method total profits should be same which is not the case here. Can you explain why
John MoffatJohn MoffatTutor7y ago#1
The profit will not be the same because there is inventory and the inventory will be valued differently in the two methods.
IIzabel7y ago#2
Okay. So my answers are correct??
John MoffatJohn MoffatTutor7y ago#3
Yes.
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