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Process Costing bpp question 9.25

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Process Costing bpp question 9.25

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
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  • May 19, 2022 at 4:40 pm #656040
    dingdong02
    • Topics: 13
    • Replies: 1
    • ☆

    Two joint products A and B are produced in a process. Data for the process for the last period are as follows:
    Product A B
    Sales 480 320
    Production 600 400
    Common production costs in the period were $12000. There were no opening inventory. Both production had a gross margin of 40%. Common production costs were apportioned on a physical basis.
    What was the gross profit for product A in the period?
    Ans) 3840
    Please sir, can you explain this question?

    May 19, 2022 at 5:07 pm #656047
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49902
    • ☆☆☆☆☆

    The joint cost per unit is $12 (as explained in my free lectures on process costing: joint costs.)

    They sold 380 units of A, and therefore the cost of sales is 480 x $12 = $5,760.

    The gross margin is 40% (of sales) and therefore the cost of sales is 60% of the sales.
    There the profit is 40/60 x $5,760 = $3,840.

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