ACCA MA · Chapter 8 · Question 11 of 12
A joint process costs $72,000 and produces 3,000 units of P and 5,000 units of Q. P needs further processing costing $4 per unit and then sells for $20 per unit. Q needs further processing costing $8,000 in total and then sells for $16 per unit. Using the net realisable value method, how much of the joint cost is apportioned to P?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $28,800
Explanation
NRV of P = 3,000 x (20 - 4) = $48,000. NRV of Q = (5,000 x 16) - 8,000 = $72,000. Total NRV = $120,000. P's share = 72,000 x 48,000 / 120,000 = $28,800. Using final sales values without deducting further processing costs would give $30,857, and physical units would give $27,000.
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