Question 1

A pharmaceutical company processes a raw chemical that yields two joint products: Alpha and Beta. The joint processing costs up to the split-off point are $100,000.

At the split-off point, 10,000 liters of Alpha are produced with a sales value of $8 per liter, and 5,000 liters of Beta are produced with a sales value of $4 per liter.

If joint costs are apportioned based on sales value at the split-off point, how much joint cost is apportioned to Product Beta?

Accepted Answer

1. Calculate total sales value for both products. 2. Find Beta's percentage of the total sales value. 3. Apply that percentage to the total joint costs.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Apportioning based on physical units (liters) instead of sales value, which would lead to $33,333.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 5

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