QUESTION 2 - 13 Marks (16 Minutes) Cabo Degaldo (Pty) Ltd ("Cabo) operates a chemical fertilisers processing plant that produces four different joint products, namely fertiliser for grains ("FEGplus"), fertiliser for vegetables ("FEVplus"), fertiliser for beans ("FEBplus") and fertiliser for pastures ("FEPplus"). The company has a 30 September year-end and a joint and by-product costing system is in place. The joint products will be sold after further processing at their market value and no inventory is kept Budgeted information for the forthcoming 2021 financial year is as follows: Product Type Output in litres Further processing Market value of cost (R) the final product (R) FEGplus 300 000 120 000 576 000 FEVplus 85 000 118 000 214 200 FEBplus 6 000 19 980 139 980 FEPplus 12 000 9 960 210 360 Joint costs for the 2021 financial year are budgeted to consist of the following: Raw materials R250 000 Initial processing cost R394 000 Selling costs amount to RO,20 per litre for all joint product types. The company's policy is to apportion joint costs at the split-off point based on the net realisable value (NRV) at split-off point method. REQUIRED Marks (a) Calculate the budgeted gross profit or loss for product FEVplus and the budgeted gross profit or loss for product FEPplus for the 2021 financial year. (10) (b) Assume the following four (4) points for question (b) only for the 2021 financial year budget: 1. A by-product (for which a regular market exists) will also be rendered by the joint process. 2. The net proceeds from the by-product is expected to be R7 260. 3. The physical standard method is used to allocate joint costs. 4. Except for point 1 to 3 above, all the other information remains as given in the scenario. Calculate the budgeted total joint cost that will be allocated to product FEBplus for the 2021 financial year. (3) TOTAL 13