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Greetings good sir,
8b.9
Could you please use made up figures to prove option 1 and disprove option 2 ?8b.11
Why doesn’t the answer at the back deduct the 400kg from 2000kg for the By-product ? That’s what I did. We should deduct both a) the value of the by product as a negative cost to reduce the cost, b) as well as the units of the by product from the main product, to increase the cost. Just like for Normal loss.
The working only follows a) and ignores b) which I followed through.8b.9 Given that the costs are apportioned on the same basis as the sales value, then automatically the ratio of profit to the sales must be the same for each product. For figures check the numbers in the example that I work through in my lecture on this.
8b.11 The question specifically says that they produce 2,000 kg of the main product and 400 kg of a by-product. Therefore the total production was 2,400 kg (the 2,000 of the main product cannot also include 400 of the by-product).
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