Question 3 (10 Marks 18 Minutes) Regular Exam 2015

Organik CC manufactures three milk based drinks Strawberry, Vanilla and Chocolate that is sold to hotels and lodges. Milk the main raw material is initially processed in department P and is then split to undergo further processing as follows: (i) in department Q to produce Strawberry,

(ii) in department R to produce Vanilla,

(iii) in department S to produce Chocolate. There is no loss in further processing of milk to produce these products. The cost data for July 2015 is as follows: Cost of milk introduced in department P N$ 1 268 800 Other direct materials: N$ Department P 384 000 Department Q 96 000 Department R 64 000 Department S 36 000 Production overheads of N$ 464 000 are to be apportioned to the departments on other direct materials basis. During the month under reference, the company sold all three products as under: Products Strawberry Vanilla Chocolate Output sold (Litres) 44 000 40 000 20 000 Selling price per litre 32 24 24 There is no opening or closing inventory. REQUIRED: MARKS 3.1 Prepare a statement showing the apportionment of joint costs to joint products using physical units 7 3.2 Calculate the profit earned by each product 3

TOTAL MARKS 10