XYZ Ltd processes and purifies a basic chemical which is then broken down by reaction to give three separate products. Explain the approaches to joint cost allocation using the following information:
|
Product |
Units produced |
Final market value per unit (£) |
Costs beyond split off point (£) |
|
A |
3,000 |
5.00 |
4,000 |
|
B |
1,000 |
4.00 |
1,800 |
|
C |
2,000 |
3.00 |
2,400 |
Joint costs incurred up to the split off point are £2,000.