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Question 8 (15 Marks, 27 Minutes) Normal 2018 ABC is in the manufacturing sector and produces products Xo, Yo and Zo from a single production

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Question 8 (15 Marks, 27 Minutes) Normal 2018 ABC is in the manufacturing sector and produces products Xo, Yo and Zo from a single production process. Xo and Yo are processed further before they can be sold and Zo is incidental to the production process, therefore it is sold to a local farmer who uses it to fertilize his soil. The by-product is sold immediately for N$6 per unit and the selling prices after further processing of Xo and Yo are N$65 and N$75, respectively. The following relates to the month of November Joint costs for 2 500 unit of Xo, 3 500 units of Yo and 3 000 units of Zo are as follows: Material (5 000 kg at N$25 p/kg) Labour. N$32 500 Overheads are applied at N$1.75 for every kg of material used. Each final product loses 20% of the input as the company processes Xo and Yo further, costs of processing Xo and Yo further are: N$23 500 for all 2 500 units of Xo N$35 500 for all 3 500 units of Yo It is the practice of the company to reduce joint costs with the net income from a product, if any. REQUIRED: Marks 8.1 Distinguish between a joint and a by-product 8.2 Calculate total joint costs to be allocated to the joint products. 5 8.3 Allocate joint costs according to the Constant gross profit percentage method TOTAL MARKS FOR QUESTION 8 15 9

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