Golden Ltd is company that makes 2 primary products Rose Gold (RD) and Yellow Gold (YG) and 1 secondary product Burnt Gold (BG) from a production process. The following costs are incurred in the production process.

N$

Materials

250,000

Direct Labour

100,000

Variable overheard

60,000

Fixed overheads

90,000

Total

500,000

The company uses the net-realizable value to allocate common costs. For the year ended 31st December 2020, the company did not have opening inventory for any of the products. The following information relate to the 3 products for the financial year ended 31st December 2020:

Product

RG

YG

BG

Selling price at split-off point / kg

15

25

5

Selling price after split-off point/ kg

20

30

7

Cost after split-off point

105,000

145,000

60,000

Output in kgs

40,000

30,000

20,000

Required: In their forecasts, the cost accountants of Golden Ltd determined a sale of only 25,000kgs of product YG if the product is sold as it is. Calculate the gross profit from product YG if it is not processed further.

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