Intermediate: Flow chart and calculation of cost per unit for joint products A distillation plant, which works continuously, processes 1000 tonnes of raw material each day. The raw material costs £4 per tonne and the plant operating costs per day are £2600. From the input of raw material the following output is produced:

From the initial distillation process, Distillate X passes through a heat process which costs £1500 per day and becomes product X which requires blending before sale.
Distillate Y goes through a second distillation process costing £3300 per day and produces 75% of product Y and 25% of product XI.
Distillate Z has a second distillation process costing £2400 per day and produces 60% of product Z and 40% of product X2. The three streams of products X, XI and X2 are blended, at a cost of £1555 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 such 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; (18 marks)

(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; (5 marks)

(c) suggest an alternative method for the treat¬
ment 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