Question

Chineke Ltd manufactures three joint products and one by-product (Dee) in a single process. The following...

Chineke Ltd manufactures three joint products and one by-product (Dee) in a single process. The following are the actual results for March 2019:

Ayee Units

Bee Units

Cee Units

Dee Units

Production at 100% capacity

20 000

25 000

10 000

2 000

All joint products can be processed further into a superior product namely: Super Aye, Super Bee and Super Cee. Due to strict quality control at the end of the production process, a rejection of 10% of the final product will occur if further processing is done after the split-off point.

The following information is applicable if products are processed further:

Super Ayee (N$)

Super Bee (N$)

Super Cee (N$)

Selling price per unit

20

15

25

Additional processing costs

4

4

5

Additional information:

Costs incurred in the joint process were:

Direct materials N$285 500

Direct labour N$143 100

Manufacturing overheads N$95 400

Note: By-products are sold for N$3 per unit.

Required:

Calculate the profit attributed to product Super Bee if the total production is sold and the company uses the physical standard method to allocate joint cost is (round off to a whole number) (Assume that a regular market exists for the by-product):

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