ExpertHard2 marksShort Answer
ACCA · Question 12 · Cost Accounting Techniques
A chemical manufacturer produces two joint products, Alpha and Beta, incurring a joint cost of $50,000 before the split-off point.
Alpha can be sold for $40,000 after further processing costs of $10,000.
Beta can be sold for $60,000 after further processing costs of $10,000.
Using the Net Realizable Value (NRV) method, calculate the amount of joint cost apportioned to Product Beta. (Enter numbers only)
A chemical manufacturer produces two joint products, Alpha and Beta, incurring a joint cost of $50,000 before the split-off point.
Alpha can be sold for $40,000 after further processing costs of $10,000.
Beta can be sold for $60,000 after further processing costs of $10,000.
Using the Net Realizable Value (NRV) method, calculate the amount of joint cost apportioned to Product Beta. (Enter numbers only)
How to approach this question
1. Calculate NRV for Alpha (Sales - Further processing). 2. Calculate NRV for Beta. 3. Find total NRV. 4. Apportion the $50,000 joint cost based on Beta's proportion of total NRV.
Full Answer
NRV of Alpha = $40,000 - $10,000 = $30,000.
NRV of Beta = $60,000 - $10,000 = $50,000.
Total NRV = $30,000 + $50,000 = $80,000.
Proportion for Beta = $50,000 / $80,000 = 5/8.
Joint cost apportioned to Beta = 5/8 × $50,000 = $31,250.
Common mistakes
Apportioning based on final sales value ($60k / $100k) instead of NRV.
Practice the full ACCA MA — Management Accounting Practice Exam 4
38 questions · hints · full answers · grading
More questions from this exam
Q01A global environmental NGO is planning its resource allocation for the next five years to combat ...EasyQ02A fintech startup is analyzing data to determine the viability of launching a new micro-lending a...EasyQ03A public water utility incurs a base maintenance cost of $10,000 per month for up to 5,000 gallon...MediumQ04An agricultural cooperative produces organic fertilizer. Which of the following costs would be cl...MediumQ05A cross-border logistics company uses an additive time series model to forecast shipping volumes....Medium