Distillation plant A distillation plant, which works continuously, processes 1,000 tonnes of raw material each day. The raw material costs £4 per tonne and the plant operating costs per day are £2,600. From the input of raw material the following output is produced :

From the initial distillation process, distillate Xpasses through a heat process which costs £1,500 per day and becomes product X which requires blending before sale.
Distillate Ygoes through a second distillation process costing £3,300 per day and produces 75% of product Y and 25% of product Xl .
Distillate Zgoes through a second distillation process costing £2,400 per day and produces 60% of product Z and 40% of product X2.
The three streams of products X, Xl and X2 are blended, at a cost of £1,155 per day, to become the saleable final product XXX.
There is no loss of material from any of the processes .
By-product B is sold for £3 per tonne and the proceeds are credited to the process from which the by-product is derived .
Joint costs are apportioned on a physical unit basis.
You are required to :

(a) draw a flow chart, flowing from left to right, to show for one day of production the flow of material and the build-up of the operating costs for each product;

(b) present a statement for management showing for each of the products XXX, Y and Z the output for one day, the total cost and the unit cost per tonne ;

(e) suggest an alternative method for the treatment of the income receivable for by-product B than that followed in this question (figures are not required).

Transcribed Image Text:

% Distillate X 40 Distillate Y 30 Distillate Z 20 By-product B 10