U CO. has two products, product X and product B, emerge from a joint process. Product X has been allocated P30,800 of the total joint costs of P44,000. A total of 2,000 units of product X are produced from the joint process. Product X can be sold at the split-off point for P13 per unit, or it can be processed further for an additional total cost of P14,000 and then sold for P15 per unit. If product X I not processed further and sold, what would be the effect (increase/decrease) on the overall profit of the company compared with sale at split-off point?
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.
U CO. has two products, product X and product B, emerge from a joint process. Product X has been allocated P30,800 of the total joint costs of P44,000. A total of 2,000 units of product X are produced from the joint process. Product X can be sold at the split-off point for P13 per unit, or it can be processed further for an additional total cost of P14,000 and then sold for P15 per unit. If product X I not processed further and sold, what would be the effect (increase/decrease) on the overall profit of the company compared with sale at split-off point?
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