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ChimiePro S . A . converts ethylene into two main products: acetic acid and ethanol. The production process begins with the oxidation of ethylene, and
ChimiePro SA converts ethylene into two main products: acetic acid and ethanol. The production process begins with the oxidation of ethylene, and a byproduct called acetaldehyde is also generated, which is sold without further processing.
Acetic acid and ethanol are then separated and purified in subsequent production stages.
During the last quarter, the following data were recorded:
The company purchased tonnes of ethylene at a price of per tonne, including transport costs.
Direct labor costs and manufacturing overheads for ethylene oxidation amounted to At the end of the period, tonnes of unprocessed ethylene remained in stock.
Of the processed ethylene, tonnes were used to produce acetic acid and tonnes to produce ethanol.
The standard cost of converting oxidized ethylene into acetic acid was per tonne, and for ethanol, per tonne. There was no difference between standard and actual costs during this period.
ChimiePro produced liter barrels of acetic acid, selling barrels at an average price of each. As for ethanol, liter barrels were produced and sold at an average price of per barrel. Acetaldehyde was sold at per ton WORK TO DO
Allocate joint production costs between acetic acid and ethanol using the theoretical market value method at the point of separation, and calculate the gross margin generated by each of the company's products. Assume that no joint production costs are allocated to bY products.
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