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Question C: Eliana Miners Inc. (EMI) produces products Alpha and Beta from a single joint...

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Accounting

Question C:

Eliana Miners Inc. (EMI) produces products Alpha and Beta from a single joint manufacturing process. The total cost of input and joint manufacturing process is estimated to be $300,000 for 2018. During the year the company expects to produce 2,000 units of Alpha and 3,000 units of Beta. The company has an option to sell products Alpha and Beta at the split-off point for $20 and $42 per unit respectively.

Required: (please round all cost calculations to two decimal places e.g. $24.36)

1. Allocate the joint manufacturing cost to Alpha and Beta using the physical unit method. (2 Marks)

2. Allocate the joint manufacturing cost to Alpha and Beta using the sales value method. (2 Marks)

3. A new customer approached EMI and offered to buy Beta at a price of $48 per unit provided the company agrees to further process the product. The accountant of EMI advised that the cost of further processing Beta would amount to $20,000. As a qualified management accountant, you are required to advise EMI whether to accept the offer and process Beta further or reject the offer and sell it at the split-off point. Show computations to support your answer. (2 Marks)

(Total 6 Marks)

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