Solution Exhibit 6.22
*Calculation of kilograms of Gamma Let X = Good output
44 000 – XXX
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 6.23 Joint-cost allocation, process further or sell by-products. (75 min) 1[AQ7] Altox Lorex Hycol Total Expected final sales value of production a €595,000 €2,500,000 €660,000 €3,755,000 Deduct expected separable costs to complete and sell – 1 1,400,000 – 1 1,400,000 Estimated net realisable value at split-off point €595,000 €1,100,000 €660,000 €2,355,000 Weighting b 0.253 0.467 0.280 1.000 Joint costs allocated cab €2,355,000); (€660,000 ÷ €2,355,000) c (€1,800,000 × 0.253); (€1,800,000 × 0.467); (€1,800,000 × 0.280) 2 Further Processing Altox Incremental revenue (€5.50 × 150,000) − (€3.50 × 170,000) €825,000 − €595,000 €230,000 Incremental processing cost 250,000 Incremental operating income €(20,000) Further Processing Lorex Incremental revenue (€5.00 × 500,000) − (€2.25 × 500,000) €2,500,000 − €1,125,000 €1,375,000 Incremental processing cost 1,400,000 Incremental operating income €(25,000 )
Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Further Processing Hycol Incremental revenue [€1.80 × (330,000 × 1.25)] − (€2 × 330,000) €742,500 − €660,000 €82,500 Incremental processing cost 75,000 Incremental operating income €7,500 Current Policy Sell Altox at split-off €595,000 Process Lorex further 1,100,000 Sell Hycol at split-off 660,000 2,355,000 Joint costs 1,800,000 Operating income €555,000 Share with your friends: |
