Problem:
JB Ltd. produces four joint products, A, B, C and D, all of which emerge from the processing of one raw material. The following are the relevant data:
Production for the period:
|
Joint Product
|
Number of Units
|
Selling Price per Unit Rs.
|
|
A
|
500
|
18.00
|
|
B
|
900
|
8.00
|
|
C
|
400
|
4.00
|
|
D
|
200
|
11.00
|
The company budgets for a profit of 10% on sales value. The other estimated costs are:
Carriage inwards: Rs.1, 000
Direct wages: Rs.3, 000
Manufacturing overheads: Rs.2, 000
Administration overheads: 10% of the sales value
You are required to,
I. Calculate the maximum price that may be paid for the raw material
II. Prepare a comprehensive cost statement for each of the products allocating the materials and other costs based up on: Number of units and Sales value.