Two products, RFA and RFZ emerge from processing in Dept. 1. A by-product RFBI is also produced in the manufacturing process. RFA cannot be sold without further processing. This is carried out in Dept. 2. RFZ can be sold at the split off point for $13 per litre, but is presently further refined in Dept. 3. Details of production and costs incurred during the current period are outlined:

Department	Added cost materials	$Conversion Costs
1	$45000	$ 31000
2	$ 6000	$ 10000
3	$ 12000	$ 14000

 

Product	Production Liters	Sales Litres	Market Price
RFA	3000	2800	$22.00
RFZ	7000	6500	$18.00
RFBI	1000	900	$ 2.00

The net realizable value of RFBI is credited to Dept. 1 costs after allowing $300 for Administrative costs and $300 for Selling Costs all of which are considered variable. A net profit of 20% on sales value must also be achieved.

Required:

a. Prepare a statement to allocate to Dept. 1 costs to the joint products using the relative sales value method

b. Prepare a columnar trading statement showing for all products, sales, the cost of goods sold, and the gross profit.

Answer rating: 100% (QA)

Particular COGS Joint cost RFA RFZ A Further processing cost REA RFZ RFBI 300300 B ... View the full answer