Joint Products Botjina Paper Products produces chipboard, newsprint and kraft paper from pulp which it buys at P5 per kilo. On the average, the company uses 100,000 kilos of pulp and incurs conversion cost of P500,000 per month. Chipboard Newsprint Kraft paper Monthly production and sales price figures for each product are as follows: Sales Price P 2.40 per sheet 20.00 per ream 1.50 per sheet Production 200,000 sheets 50,000 reams 30,000 sheets The total joint cost is allocated based on the weight (in kilos) of the products manufactured during the month. (Assume that the allocation results are: 17% of the total joint cost is allocated to chipboard, 80% to newsprint and 3% to kraft paper). One of the joint products, the kraft paper, may be processed further to produce document envelopes which can be sold at P2.00 per unit. Each sheet of kraft paper may be converted into one document envelope at a cost of sixty centavos. MAS 1305 – Page 5 Required: Should the kraft paper be sold at the split off point or converted into document envelope?

Joint Products Botjina Paper Products produces chipboard, newsprint and kraft paper from pulp which it buys at P5 per kilo. On the average, the company uses 100,000 kilos of pulp and incurs conversion cost of P500,000 per month. Chipboard Newsprint Kraft paper Monthly production and sales price figures for each product are as follows: Sales Price P 2.40 per sheet 20.00 per ream 1.50 per sheet Production 200,000 sheets 50,000 reams 30,000 sheets The total joint cost is allocated based on the weight (in kilos) of the products manufactured during the month. (Assume that the allocation results are: 17% of the total joint cost is allocated to chipboard, 80% to newsprint and 3% to kraft paper). One of the joint products, the kraft paper, may be processed further to produce document envelopes which can be sold at P2.00 per unit. Each sheet of kraft paper may be converted into one document envelope at a cost of sixty centavos. MAS 1305 – Page 5 Required: Should the kraft paper be sold at the split off point or converted into document envelope?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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