Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Joint Products – profit earned from sales

- This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.

- AuthorPosts
- December 28, 2014 at 5:09 am #221711
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 ofproduct J 8000 7000

product k 8000 6000

product x 1000 1000The 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 6750my 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) = 11250December 28, 2014 at 9:29 am #221717You 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)

December 28, 2014 at 12:48 pm #221721hi 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) = 6750thank you for the help & reply

regards,

mollyDecember 29, 2014 at 10:31 am #221752You are welcome 🙂

- AuthorPosts

- You must be logged in to reply to this topic.