CA Inter P4 · Chapter 10 · Question 3 of 8
Joint costs of ₹3,90,000 produce 6,000 kg of P and 10,000 kg of Q, neither of which is saleable at split-off. After further processing, P sells at ₹75 per kg (further cost ₹90,000) and Q sells at ₹54 per kg (further cost ₹1,20,000). Using the net realisable value method, the joint cost apportioned to Q is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹2,10,000.00
Explanation
NRV of P = 6,000 x ₹75 - ₹90,000 = ₹3,60,000. NRV of Q = 10,000 x ₹54 - ₹1,20,000 = ₹4,20,000. Total NRV = ₹7,80,000. Share of Q = ₹3,90,000 x 4,20,000/7,80,000 = ₹2,10,000. The final sales value basis ignores further processing costs and gives a different answer.
More Joint Products and By-Products MCQs
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- Q6The split-off point is the point in a joint production process at which:
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- Q8Under the survey (point value) method of apportioning joint costs, the basis of apportionment is:
- Q1Joint costs of ₹4,80,000 are incurred up to the split-off point, producing 6,000 kg of product P and 10,000 kg of product Q. Using the…