Question Four

a) An entity incurs a joint cost of Kes 64,500 in producing two products A (200 units) and B (200 units) and earns a sales revenue of Kes 86,000 by selling @ Kes 170 per unit of product A, and product B @ Kes 260 per unit. Further processing costs for products A and B are Kes 4,000 and Kes 32,000, respectively.

Required:

Apportion the Joint cost of products A and B using the net realizable value method

b) Compute the standard error of estimate (Se) of the model = 50 + 0.3x for the following data and interpret the results.

x 800 1200 400 1600

y 350 350 150 550