A manufacturing unit imports raw material and the process is to produce three different products, namely, bright, light and white. The raw material has an FOB value of Rs. 5 per kg and freight and insurance are charged at 10% of FOB price. Customs duty as 120% of CIF is levied at the time of import. Auxiliary duty at 20% is also charged on CIF price. Countervailing duty is charged on CIF plus duty at 10%. The landed cost includes 5% for clearing charges.
Bright and light are joint products while white emerges as a by-product. The value of by-product after deducting 30% (10% being notional profit and 20% for selling expenses) from sales value is credited to process account. The unit consumed 4,000 kg of raw materials during a year. The relevant data are as follows:
|
Bright |
Light |
White |
|
|
Production & Sale (kg) |
1,400 |
1,600 |
1,000 |
|
Selling price (Rs. per kg) |
30 |
26 |
12 |
|
Further processing cost (Rs.) |
1,500 |
1,000 |
— |
Assuming additional cost other than material at Rs. 15,800 for all products (includes Rs. 800 for white), prepare a statement showing:
- Credit to process account for by-product sale
- Allocation of joint costs on relative sales value basis
- profit on each product.