Problems In Joint Products

1. B ltd. manufactures product A, which yields two by-products B and C. The actual joint expenses of manufacture for a period were Rs.8,000.
It was estimated that profits on each product as a percentage of sales would be 30%, 25% and 15% respectively. Subsequent expenses were:

A B C

Material 100 75 25
Direct wages 200 125 50
Overheads 150 125 75 450 325 150
Sales 6,000 4,000 2,500

Prepare a statement showing the apportionment of the joint expenses of manufacture over the different products. Also presume that selling expenses are apportioned over the products as a percentage to sales.

2. In a process line of XY Co., three joint products are produced. For the month of May 1999, the following data were available. Products L M N
Sales price per kg. 5 10 20
Post-separation point costs 10,000 5,000 15,000
Output in kg 2,500 1,000 1,500
Pre-separation point costs amounted to Rs.20,000
The joint products are manufactured in one common process, after which they are separated and may undergo further individual processing, the pre-separation point costs are apportioned to joint products according to weight. You are required to prepare a statement showing the estimated profit or loss for each product and in total.

3. In the course of manufacture of the main product ‘P’, by products ‘A’ and ‘B’ also emerge. The joint expenses of manufacture amount to Rs.1,19,550. All the three products are processed further after separation and sold as per details given below:

Main Product By-products

‘P’ ‘A’ ‘B’
Sales Rs.90,000 60,000 40,000
Cost incurred after separation 6,000 5,000 4,000
Profit as percentage on sales 25 20 15
Total fixed selling expenses are 10% of total cost