A factory producing an article A also produces a by product B, which is further processed into finished product. The joint cost of manufacture is given as follows:
|
Material |
50,000 |
|
Labour |
30,000 |
|
Overheads |
20,000 |
Subsequent costs are given as follows:
|
A |
B |
|
|
(Rs) |
(Rs) |
|
|
Material |
30,000 |
15,000 |
|
Labour |
14,000 |
10,000 |
|
Overheads |
6,000 |
5,000 |
|
50,000 |
30,000 |
|
|
Selling prices |
1,60,000 |
80,000 |
Estimated profits on sales are 25% for A and 290% for B. It is assumed that selling and distribution expenses are in proportion to sales prices. Show how you would apportion joint costs of manufacture and prepare a statement showing the cost of production of A and B.