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Question 3 Capri Salsa Ltd obtains two joint products and a by-product from its production process. By- product revenues are treated as other income and
Question 3 Capri Salsa Ltd obtains two joint products and a by-product from its production process. By- product revenues are treated as other income and a non-cost approach is used to assign costs to them. During the period, 1.200 units were processed at a cost of 12,000 for materials and conversion costs, showing the following: Product Sales Value Costs after Final Value Units at Separation Separation 200 4.000 2.000 10,000 Y 400 5,000 6,000 12,000 By-product 150 500 500 1,500 Requirement a) Compute all relevant costs and allocate them using a physical method of allocation. 8 Marks b) Compute all relevant costs and alocate them using net realizable value as the basis for allocation. 8 Marks c) Compute all relevant costs and allocate them using final sales value as the basis for allocation. 8 Marks d) How much of the joint costs should be allocated to the by-product? Discuss the difference between by-products and joint products. 6 Marks Total 30 Marks
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