Joint cost apportionment and decisions on further processing A process costing £200000 produces three products - A, B and C. Output details are as follows: 1 Product A 6000 litres Product B 10000 litres Product C 20000 tonnes Each product may be sold at the completion of the process as follows:

Alternatively, further processing of each individual product can be undertaken to produce an enhanced product thus:

Required:

(a) Explain the following terms:
(i) normal process loss;
(ii) joint product;
(iii) by-product;
and state the appropriate costing treatments for normal process loss and for by-products.
(10 marks)

(b) Calculate the apportionment of joint process costs to products A, B and C above.
(8 marks)

(c) Explain whether the initial process should be undertaken and which, if any, of the enhanced products should be produced.
(7 marks)
AAT

Transcribed Image Text:

Product A Product B Product C Sales value at the end of the first process 10 per litre 4 per litre 10 per tonne