Question 1

A chemical processing facility produces two joint products, Alpha and Beta, from a single process. Joint costs are $100,000. 
Alpha produces 5,000 liters, selling for $10/liter after further processing costs of $2/liter.
Beta produces 10,000 liters, selling for $6/liter after further processing costs of $1/liter.

Using the Net Realizable Value (NRV) method, how much joint cost is apportioned to Alpha?

Accepted Answer

Calculate NRV for each product: Volume * (Selling Price - Further Processing Cost). Then apportion the $100,000 joint cost based on the ratio of each product's NRV to the total NRV.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using final sales value without deducting further processing costs.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 2

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