Nelson SA Obtains Two Products and a By-Product from Its Production

question 38

Essay

Nelson SA. obtains two products and a by-product from its production process. By-product revenues are treated as other income and a noncost approach is used to assign costs to them. During the period, 1,200 units were processed at a cost of £12,000 for materials and conversion costs, resulting in the following: $\begin{array}{ccccc}&\text { Sales Value }& \text { Costs after } & \text { Final }\\\text { Product }& \text { Units } & \text { at Separation } & \text { Separation } & \text {Value}\\\mathrm{X} & 200 & £ 4,000 & £ 2,000 & £ 10,000 \\\mathrm{Y} & 400 & 5,000 & 6,000 & 12,000 \\\text { By-product } & 150 & 500 & 500 & 1,500\end{array}$
a.Account for all costs using a physical basis for allocation.
b.Account for all costs using net realizable value as the basis for allocation.
c.Account for all costs using final sales value as the basis for allocation.
d.How much joint costs should be allocated to the by-product?

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Definitions:

Employee Relations

The management of relationships between employers and employees, focusing on maintaining mutual respect, satisfaction, and productivity.

Voice of Management

The ways in which an organization's management communicates with employees, often concerning decision-making, policies, and overall direction.

Human Resource Departments

Organizational units responsible for recruiting, training, and managing employees.

Sustainable Strategies

Approaches in organizational and business planning that focus on long-term success and sustainability by considering environmental, social, and economic impacts.