An international designer produces three (3) jewellery designer items using a joint process.

Total joint costs amount to R650 000. The three products are A, B and C. the output details are as follows:

Product A 120 units

Product B 108 units

Product C 112 units

Each product can be sold at the split-off point. The sales values at the split-off point are as follows:

Product A R2 500 per unit

Product B R2 000 per unit

Product C R2 225 per unit

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

Required: Prepare a statement of profit or loss for the company if all three products are processed further and then sold. Assume that there is no opening or closing inventory. It is the company’s policy to allocate joint costs to the products using the market value at the split-off point. (Note: round off all amounts to the nearest R1)

Further processing Sales value after further costs processing Enhanced productA R400 per unit R2 850 per unit Enhanced product B R380 per unit R2 500 per unit Enhanced product C R350 per unit R2 750 per unt