The joint cost to produce Products 1A, 2A, 3A and 4A is $4,000.Each of these...
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The joint cost to produce Products 1A, 2A, 3A and 4A is $4,000.Each of these products can either be sold at the end of the joint production process, or can be processed further into 1B, 2B, 3B and 4B.
Production and selling information is as follows:
Product Name
Product 1A
Product 2A
Product 3A
Product 4A
Batch size (kg)
30
20
6
4
Sales Value ($ per kg)
100
50
2
0.5
If further processed:
processed from:
Product 1A
Product 2A
Product 3A
Product 4A
processed into:
Product 1B
Product 2B
Product 3B
Product 4B
additional costs (in $)
50
130
120
10
Final batch size (kg)
29
15
6
3
Final Sales value ($/kg)
120
200
100
6
For example, at the end of the joint production process, there are 30 kg of Product 1A produced, and each kg of Product 1A sells for $100/kg.The 30kg batch of Product 1A can either be sold at this point for $3,000 (30kg x $100/kg) or the batch can be further processed into a batch of Product 1B at an additional cost of $50.This will produce a 29kg batch of Production 1B that sells for $120/kg for a total sales value of $3,480 (29kg x $120/kg).
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