Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

c) Firm XYZ purchases raw milk from individual farms and processes it up to the split-off point, where two products (cream and liquid skim) are

image text in transcribed
c) Firm XYZ purchases raw milk from individual farms and processes it up to the split-off point, where two products (cream and liquid skim) are obtained. These two products are sold to an independent company, which markets and distributes them to supermarkets and other retail outlets. Raw milk processed: 1.100 litres (1.100 litres of raw milk yield 900 litres of good product with a 200- litre shrinkage): Production Sales Cream 200 litres 180 litres at 3 per litre Liquid skim 700 litres 650 litres at 2 per litre Opening stock Closing stock Raw milk O litre O litre Cream O litre 20 litres Liquid skim O litre 50 litres Joint Costs: 850 >> Use one decimal point for your calculations i) Calculate the allocation of joint costs and the joint production costs per litre using the Sales Value At Split-Off Method? [10 marks] Page 3 of 5 ii) Assume the same situation as before except that both cream and liquid skim can be processed further (Cream and Liquid Skim are no longer produced): Cream Butter cream: The initial 200 litres of cream are further processed to yield 170 litres of butter cream at additional processing (separable) costs of 400. Butter cream is sold for 10.00 per litre. Liquid skim Condensed milk: 700 litres of liquid skim are further processed to yield 550 litres of condensed milk at additional processing costs of 800. Condensed milk is sold for 9.00 per litre. Calculate the allocation of joint costs and the production cost per litre using the Estimated Net Realisable Value (NRV) method. [20 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing The Risk Management Process

Authors: K. H. Spencer Pickett

1st Edition

0471690538, 978-0471690535

More Books

Students also viewed these Accounting questions

Question

=+ (d) Show that Y ,, Y2, ... are independent.

Answered: 1 week ago