Question

1. You work as a Junior Management Accountant for JB & Sons, a local manufacturer of three joint products (cheese, cream and butter cream) in a continuous single process from milk pasteurisation. The company allows normal loss at 10% of inputs and do not have any value.

The following information for the month of February 2020 has been made available to you.

Direct materials input                         20,000 kg at a cost of £36,000

Direct labour costs                             3,000 hours @ £6 per hour

Variable production overheads        3,000 hours @ £1 per hour

Fixed production overheads are absorbed at a rate of £8 per direct labour hour.

There is no opening or closing WIP

	Expected Output (kg)	Selling Price per kg (£)
Cheese Cream Butter Cream	9,000 6,000 3,000	8 6 4

Required

Calculate the gross profit margin for each of the joint products.

Answer 1