appreciate & please help the calculation for profit earned as per below question :-
( I cannot get the answer for 1.5250 and 2.6750)
opening stock nil
costs of processing direct material $25,000 & direct labour $10,000
production overheads are absorbed at the rate of 300% of direct labour costs
production unit sales unit
output & sales consisted of
product J 8000 7000
product k 8000 6000
product x 1000 1000
The sales value per unit of J, K and X is $4, $6 and $0.50 respectively. The saleable value
of the by-product is deducted from process costs before apportioning costs to each
joint product. Costs of the common processing are apportioned between product J and K on the basis on sales value of production.
1. what was the profit earned from the sales of J ? answer 5250
2. what was the profit earned from the sales of K ? answer 6750
my calculation :
Product output S/P S.value cost cost unit
J 8000 $4 32,000 22,000 2.75
K 8000 $6 48,000 33,000 4.125
80,000 55,000
cost : 25,000+30,000-500 = 55,000
J K J
cost 22,000.00 33,000.00 sales 7000 X ( $4-$2.75=1.25) = 8750
sales 32,000.00 48,000.00
profit 10,000.00 15,000.00 K
sales 6000 x ($6 - $4.125= 1.875) = 11250
Ask the Tutor ACCA MA
Joint Products - profit earned from sales
You have calculated the joint cost wrongly.
Materials are $25,000; Labour is $10,000; Overheads are 300% x 10,000 = $30,000
So the total is 65,000 (not 55000) less the revenue from the by-product gives $64,500.
Sales value of J production is $32,000 and K production is $48,000.
So joint cost for J is 32/80 x $64500 = $25,800, giving a cost per unit of 25,800/8,000 = $3.225
So profit from J = 7,000 x ($4 - $3.225) = $5425
(Assuming that you have typed the question correctly, then the answer of $5250 is not correct. The answer has forgotten to subtract the sales proceeds of $500 from the process costs and has therefore calculated on the basis of joint costs of $65,000 instead of $64,500. Alternatively, there is a typing error and the material costs should be $25,500)
hi Sir,
yes, I have typed the wrong amount of materials and correct should be 25500.
I can get the answers of product J 5250 and K 6750.
correction of joint costs : 25500+10000+30000-500=65000
J profit earned : 7000 x ($4-3.25=0.75) = 5250
K profit earned : 6000 x ($6-4.875=1.125) = 6750
thank you for the help & reply
regards,
molly
You are welcome :-)
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