a process costing pound 200 000 produces 3 products a b and c output details are as 610053

Joint cost apportionment and decisions of further processing

A process costing £200 000 produces 3 products- A, B and C. Output details are as follows:

Each product may be sold at the completion of the process as follows;

Sales value at the end of the first process
Product A	£10 per litre
Product B	£4 per litre
Product C	£10 per tonne

Alternatively, further processing of each individual product can be undertaken to produce an enhanced product thus:

	Subsequent processing costs	Sales value after final process
Enhanced Product A	£14 per litre	£20 per litre
Enhanced product B	£12 per litre	£8 per litre
Enhanced product C	£6 per tonne	£16 per tonne

Required:

(a) Explain the following terms:

(i) Normal process loss;

(ii) Joint product;

(iii) By-product;

And state the appropriate costing treatments for normal process loss and for by-products.

(b) Calculate the apportionment of joint process costs to products A,B and C above.

(c) Explain whether the initial process should be undertaken and which, if any, of the enhanced products should be produced.