A factory producing an article A also produces a by-product B, which is further processed into…
A factory producing an article A also produces a by-product B, which is further processed into finished product. The joint cost of manufacture is given as follows:
Material
50,000
Labour
30,000
Overheads
20,000
Subsequent costs are given as follows:
A
B
(Rs)
(Rs)
Material
30,000
15,000
Labour
14,000
10,000
Overheads
6,000
5,000
50,000
30,000
Selling prices
1,60,000
80,000
Estimated profits on sales are 25% for A and 290% for B. It is assumed that selling and distribution expenses are in proportion to sales prices. Show how you would apportion joint costs of manufacture and prepare a statement showing the cost of production of A and B.
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