Ash Chemicals produces three joint products in one common process but each product is capable of...

  

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Ash Chemicals produces three joint products in one common process but each product is capable of being further processed separately after the split off point. The estimated data below relates to the month of June. Selling price at split off point (per litre) Selling price after further processing (per litre) Post-separation point costs Output in litres Product B £6 £10 Product K Product C £9 £30 £22,500 2,000 £8 £20 £20,000 3,500 £10,000 2,500 Pre-separation point joint costs are estimated to be £40,000 and it is current practice to apportion these to the three products according to litres produced. Required: (a) (i) Prepare a statement of estimated profit or loss for each product and in total for June if all three products are processed further. (ii) Advise how profits could be maximised if one or more products are sold at the split-off point. It has been suggested that responsibility accounting would be more relevant in Ash Chemicals with the process incurring the common cost being treated as a profit centre. (i) (b) Explain briefly how this would be best achieved (ii) (iii) State the resulting profit for the common process State two advantages of this process (c) Discuss the problems associated with joint cost apportionment in relation to: (i) (ii) (iii) planning control decision making Ash Chemicals produces three joint products in one common process but each product is capable of being further processed separately after the split off point. The estimated data below relates to the month of June. Selling price at split off point (per litre) Selling price after further processing (per litre) Post-separation point costs Output in litres Product B £6 £10 Product K Product C £9 £30 £22,500 2,000 £8 £20 £20,000 3,500 £10,000 2,500 Pre-separation point joint costs are estimated to be £40,000 and it is current practice to apportion these to the three products according to litres produced. Required: (a) (i) Prepare a statement of estimated profit or loss for each product and in total for June if all three products are processed further. (ii) Advise how profits could be maximised if one or more products are sold at the split-off point. It has been suggested that responsibility accounting would be more relevant in Ash Chemicals with the process incurring the common cost being treated as a profit centre. (i) (b) Explain briefly how this would be best achieved (ii) (iii) State the resulting profit for the common process State two advantages of this process (c) Discuss the problems associated with joint cost apportionment in relation to: (i) (ii) (iii) planning control decision making

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A i Estimated profit loss for each product for June Product B K C Prof... View the full answer