QUESTION 12 (22 marks) Pine Products buys raw pinewood from which it processes and sells pine products. Some of the processed timber is trimmed and filled with lead to make pencils and some of it is trimmed and decorated to make chopsticks. The wood shavings are also used but they are treated as a by-product and sold to a local stable as horse bedding. Pine Products uses the approach of deducting the net market value of the by-products manufactured from production costs. The following information is applicable to a normal month of production: The joint production costs consist of R 77 306 material cost, R26 200 labour cost and R25 061 overheads. DATA Assigned weights Kg produced Market value per KG at split off Pencils Chop Sticks Wood Shavings 3 2 27 000 8 000 500 R3.50 R3.30 R1.00 R1.80 R1.00 R0.25 Separable costs per kg Market value (total) after further processing R 172 000 R36 500 R692 Required: Answer the following questions: 12.1 Use the constant gross profit percentage method to assign the joint costs to the joint products. Assume that both are processed further. (3) 12.2 Use the sales value at split off method to assign the joint costs to all the products. Calculate the inventory value per kg of the products. Assume that all products are processed further. (5) 9