Answer to Question #226449 in Management for kim

Question

Omega Refinery has the option of selling all four products at the split off point. This alternative would yield the following sales for October 2020 production. 

 

 

The following data relates to sales of the refined products in October 2020: 

Products 

Further process costs to make super products N$ 

Sales N$ 

Sun Sweet 4 000 000 6 000 000 Sun Vigar 1 800 000 2 000 000 Sun Chilly 1 800 000 2 800 000 

 

REQUIRED: MARKS 3.1 Allocate joint costs according to the physical measure method. 10 3.2 Determine whether the entity should process Crude Vigar into Sun Vigar. 7 TOTAL MARKS 17 

Answer 1

Answer 3.1) Joint cost = N$2,100,000 Calculation of Physical units Allocation of Joint cost Crude Sweet = 2,100,000/400,000*100,000 =525000