CONFIDENTIAL

$2$

AC$/$NOV $2024/$MAF$201$

QUESTION

Fresh Organic Manufacturer is a producer of organic juice concentrates. It supplies juice concentrates in bulk to beverage companies that produce retail products. Due to its concentrated nature, the organic juice concentrate is frequently utilised as a natural sweetening agent. It adds sweetness to products without requiring excessive amounts of sugar or artificial sweeteners. It makes a healthier alternative for individuals seeking to lower their sugar consumption while enjoying a sweet flavour.

The company produces two juice concentrates, Citrus$-$Bliss and Berry$-$Burst. They undergo two sequential processes, starting with extraction and followed by the concentration process. To assure product quality, every process is thoroughly inspected after completion before moving to the next phase.

The following information relates to the details of both processes.

Juice Extraction Process

The extraction process involves obtaining juice by removing the skin, seeds, and any unwanted particles from the fruit. The fruit components are pressed and the juice is separated from the pulp, leaving a concentrate of the fruit juice.

Typically, at the end of this process, $5\%$ of the input results in a by$-$product. With additional processing of RM$3$ per kilogram $($kg$),$ this by$-$product is converted into Fruit Pulp, which is used in animal feed. The selling price of Fruit Pulp is RM$20$ per kg$.$ The net realisable value of the Fruit Pulp is utilised to lower the production costs associated with the juice extraction process. No abnormal gains or abnormal losses were identified in this process.

Concentration Process

This process involves removing water from the juice, yielding a more concentrated product. This is commonly achieved through evaporation or vacuum techniques. The purpose of the concentration process is to reduce the volume of the juice while preserving its natural flavour. The juice concentrate is heated and reduced, which separates the liquid into two distinct products: Citrus$-$Bliss and Berry$-$Burst.

Citrus$-$Bliss will incur an additional processing cost of RM$20$ per kg$,$ whereas Berry$-$Burst will not have any additional processing costs. Citrus$-$Bliss is sold for RM$120$ per kg$,$ while BerryBurst is sold for RM$90$ per kg$.$ The joint costs are allocated based on the net realisable value method.

Additionally, a by$-$product known as Juice Fiber is created during the extraction of CitrusBliss and Berry$-$Burst from the juice concentrate. Juice Fiber can be sold for RM$8$ per kg$.$

$($c$)$ Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

$3$

AC$/$NOV $2024/$MAF$201$

The cost data for both juice extraction and concentration processes is as follows:

$\backslash$table$[[,$Juice Extraction Process,Concentration Process$],[$Input materials,$\backslash$table$[[20,000$ kg$],[$at a cost of RM$1\mathrm{.}50$ per kg$]],$Transferred from Juice Extraction Process$],[$Direct labour,RM$15,000,$RM$51,300],[$Production overhead,RM$9,000,$RM$79,650],[$Output$,-$ Transfer to the Concentration Process by $?$ kg$,\backslash$table$[[-$ Citrus Bliss: $65\%],[-$ Berry$-$Bust: $30\%$