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
Ask the Tutor ACCA MA
Joint costing
The profit will not be the same because there is inventory and the inventory will be valued differently in the two methods.
Okay. So my answers are correct??
Yes.
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