Question 3

 

BKC Limited produces three joint products in one common process but each product is capable of being further processed separately after the split-off point.  The estimated data given below relate to January 2017:

 

                                                Product B                   Product K                  Product C

                                                                                                                   

Selling price at

the split-off point                    10                                18                                20

 

Selling price

after further processing           20                                30                                45

 

Post separation point costs      33,000                         35,000                         42,300

 

 

Output in Litres                      7,000                           5,000                           4,000

 

Pre-separation point joint costs are estimated to be €60,000 and it is current practice to apportion these costs to the three products according to litres produced.

 

Required:

  1. Prepare a statement of estimated profit or loss for each product and in total for January 2017 if all three products are processed further.

 

  1. Advise how profit could be maximised if one or more products are sold at the split-off point.  Your advice should be supported by a profit statement.

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