27% | 00:47 All File Reader Q 6.2 5 Allocate the joint costs to the Constant gross profit percentage method. TOTAL MARKS FOR QUESTION 6 10 Question 7 Supp 2017 (15 Marks, 27 Minutes) Chemicals Ltd purchases salt and processes it into more refined products, namely: Caustic Soda, Chlorine and CCC. In the month of September 2017, the company purchased salt for N$ 80 000. During the same month, conversion of N$ 120 000 were incurred up to the split of point, at which time two saleable products were produced. Chlorine can be processed further into CCC. The September production and sales information is as follows: Production (Kgs) Sales quantity (Kgs) Selling price (per kg) N$ 100 N$ 90 2 400 2 400 Caustic soda Chlorine CCC 1 600 1 000 1 000 N$ 400 All 1 600 kilograms of chlorine were further processed at an incremental cost of N$ 40 000 to yield 1 000 kilograms of CCC. There was no beginning or ending inventories of caustic soda, chlorine and CCC in September. There is an active market for chlorine. The company could have sold all its September production of chlorine at N$ 150 per kilogram. REQUIRED MARKS 5 7 7.1 Using Sales value at split off point method, determine the joint costs to be allocated to Caustic soda and Chlorine. 7.2. Using Net realizable value method, determine the joint costs to be allocated to Caustic soda and CCC. 7.3. Suppose an outsider offers to purchase 1 600 kilograms of Chlorine in September at N$ 150 per kilogram. This sale of chlorine would mean no CCC would be produced in September. How the acceptance of this offer for the month of August would affect the company's operating income? (Show all the relevant calculations). TOTAL MARKS FOR QUESTION 7 3 15 Page 19 of 71 PREVIOUS NEXT