a) Which of QUIK company’s joint products should be sold at split-off point? Please support your answer with the necessary calculations. b) Which of QUIK company’s joint products should be processed further? Support your answer with the necessary calculations. c) The company currently sells both products at the split-off point. If the company makes decisions that maximises profits, by how much would the company’s profits increase by?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
QUIK Manufacturing Company Ltd produces two products from a joint process. Information about the two joint products is as follows: Information Product A Product B
Budgeted production (in kg) 2 000 4 000 Selling price per kg at split-off $ 10 $ 20 Additional
The cost of the joint process is $ 90 000.
Required:
a) Which of QUIK company’s joint products should be sold at split-off point? Please support your answer with the necessary calculations.
b) Which of QUIK company’s joint products should be processed further? Support your answer with the necessary calculations.
c) The company currently sells both products at the split-off point. If the company makes decisions that maximises profits, by how much would the company’s profits increase by?
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