Syarikat Hyper produces two joint products; Alpha and Beta; and a by-product, Teta using the same production
Question:
Syarikat Hyper produces two joint products; Alpha and Beta; and a by-product, Teta using the same production process. The separation point occurs upon completion of production activities in Department 1. All joint products need further processing before being sold. Alpha is further processed in Department 2, Beta in Department 3 and Teta in Department 4. The net income of Teta is used to reduce joint costs.
A total of 100,000 kg of raw materials were processed by Department 1 in January. The table below shows the costs involved in each department, the percentage of product weight transferred to the departments, and each product's final selling price. Any spoilage incurred considered as normal spoilage.
Department Costs involved % of product weight allocated to departments Selling price per kg
1 RM70,000 - -
2 RM40,000 60% RM5.50
3 RM15,000 25% RM4.00
4 RM 5,000 10% RM2.00
Required:
a) Calculate the allocation of joint costs to products using the following methods: i) Physical unit ii) Constant gross profit percentage (10 marks)
b) Assume that Teta has no market value and need to be disposed with a cost of RM2000. Recalculate the allocation of joint costs to products using the net realization value method. (5 marks)
c) Assume that the Syarikat Hyper received an offer from Syarikat Megah to buy all Alpha products at the separation point. The offer price is RM4.00 per kg. Should Syarikat Hyper accept the offer? Support your answers with calculation.
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073398242
11th edition
Authors: Ferdinand Beer, E. Russell Johnston Jr., David Mazurek, Phillip Cornwell, Brian Self