Intermediate (a) Discuss the problems which joint products and by-products pose the management accountant, especially in his

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Intermediate

(a) Discuss the problems which joint products and by-products pose the management accountant, especially in his attempts to produce useful product profitability reports. Outline the usual accounting treatments of joint and by-products and indicate the extent to which these treatments are effective in overcoming the problems you have discussed. In your answer clearly describe the differences between joint and by-products and provide an example of each. (14 marks)

(b) A common process produces several joint products. After the common process has been completed each product requires further specific, and directly attributable, expenditure in order to ‘finish off’ the product and put it in a saleable condition. Specify the conditions under which it is rational to undertake:

(i) the common process, and

(ii) the final ‘finishing off’ of each of the products which are the output from the common process.

Illustrate your answer with a single numerical example.

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