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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