F3 Financial Accounting

Exam in June 2014

Joint products

Q.1

In process costing, a joint product is A A product which is produced simultaneously with other products but which is of lesser value than at least one of the other products A product which is produced simultaneously with other products and is of similar value to at least one of the other products A product which is produced simultaneously with other products but which is of greater value than any of the other products A product produced jointly with another organisation

Q.2

Ripley limited processes material X to make products R1 and R2 in a single common process. R1 is sold at the point of separation for $360 per tonne. R2 is further processes at a cost of $48 per tonne and is then sold for $480 per tonne. There is a normal process loss of 10% in the common process, and this has no value. No losses occur in the further processing of R2. In March Year 10, 1,000 tonnes of material X were processed. Material X cost $250 per tonne, and processing costs for the month amounted to $120,000. The output was 600 tonnes of R1 and 300 tonnes of R2.

Required (a) Prepare a statement showing the apportionment of the joint costs of the process between R1 and R2, using: (i) (ii) (iii) (b) Physical units (weight) basis Sales value basis Net sale value basis

Prepare statement of profit or loss under net sale value basis.

Myo Thein Naing BA (Eco), DMA, Dip IFR, ACCA (Affiliate)

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F3 Financial Accounting Q.3

Exam in June 2014

Three joint products are manufactured in a common process, which consists of two consecutive stages. Output form process 1 is transferred to process 2, and output from process 2 consists of the three joint products, H, N and B. All joint products are sold as soon as they are produced. Data for period 2 of 20X6 are as follows. Process 1 Opening and closing inventory Direct material (30,000 units at $2 per unit) Conversion costs Normal loss Scrap value of normal loss Output $60,000 $76,500 10% of input $0.50 per unit 26,000 units $226,200 10% of input $2 per unit 10,000 units of H 7,000 units of N 6,000 units of B Selling prices are $18 per unit of H, $20 per unit of N and $30 per unit of B. None Process 2 None

Required (a) (b) (c) Prepare the Process 1 account Prepare the Process 2 account Prepare a profit statement for the joint products.

Myo Thein Naing BA (Eco), DMA, Dip IFR, ACCA (Affiliate)

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F3 Financial Accounting

Exam in June 2014

Q.4

Randolph manufactures two joint products, J and K, in a common process. A by-product X is also produced. Data for the month of December 20X2 were as follows. Opening inventories Costs of processing: - direct materials - direct labour nil $25,500 $10,000

Production overheads are abosorbed at the rate of 300% of direct labour costs. Production Units Output and sales consisted of: Product J Product K By-product X 8,000 8,000 1,000 Sales Units 7,000 6,000 1,000

The sales value per unit of J, K and X are $4, $6 and $0.5 respectively. The saleable value of the by-product is deducted from process costs before apportioning costs to each joint product. Costs of the common processing are apportioned between product J and product K on the basis of sales value of production. The individual profits for December 20X2 are: Product J $ A B C D 5,250 6,750 22,750 29,250 Product K $ 6,750 5,250 29,250 22,750

Myo Thein Naing BA (Eco), DMA, Dip IFR, ACCA (Affiliate)

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