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Melake Miners Inc. (MMI) produces products A and B from a single joint manufacturing process....

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Accounting

Melake Miners Inc. (MMI) produces products A and B from a single joint manufacturing process. The total cost of input and joint manufacturing process is estimated to be $400,000 for 2021. During the year the company expects to produce 4,000 units of A and 6,000 units of B. The company has an option to sell products A and B at the split-off point for $10 and $15 per unit respectively.

Required: (Show computations and round all cost calculations to two decimal places e.g. $53.84)

1. Allocate the joint manufacturing cost to A and B using the physical unit method.

2. Allocate the joint manufacturing cost to A and B using the sales value method.

3. A new customer approached MMI and offered to buy product B at a price of $22 per unit provided the company agrees to further process the product. The accountant of MMI advised that the cost of further processing product B would amount to $37,000. As a qualified management accountant, you are required to advise MMI whether to accept the offer and process product B further or reject the offer and sell it at the split-off point. Show computations to support your answer

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