Jackson Company manufactures one main product and two by-products, A and B. For April, the
following data are available:
Main
By- Product
Product
A B
Total
Sales
Rs. 75,000
Rs. 6,000
Rs. 3,500 Rs. 84,500
Manufacturing cost after separation
Rs. 11,500
Rs. 1,100
Rs. 900 Rs. 13,500
Marketing and administrative expenses
6,000 750
550 7,300
Manufacturing cost before separation
37,500
Profit allowed for A and B is 15% and 12%, respectively.
Required:
1. Calculate manufacturing cost before separation for by-products A and B, using the market value
(reversal cost) method.
2. Prepare an income statement, detailing sales and costs for each product.
3. Comment on the reliability of costing by-products A and B in relation to the assignment of
balance joint cost on main product.
Extracted text: Q.3.b. Jackson Company manufactures one main product and two by-products, A and B. For April, the following data are available: Main By- Product Product A Total Rs. 84,500 Rs. 75,000 Rs. 11,500 6,000 Rs. 6,000 Rs. 1,100 Sales Rs. 3,500 Manufacturing cost after separation Marketing and administrative expenses Manufacturing cost before separation Rs. 13,500 7,300 Rs. 900 750 550 37,500 Profit allowed for A and B is 15% and 12%, respectively. Required: 1. Calculate manufacturing cost before separation for by-products A and B, using the market value (reversal cost) method. 2. Prepare an income statement, detailing sales and costs for each product. 3. Comment on the reliability of costing by-products A and B in relation to the assignment of balance joint cost on main product.