Page 411 - PM Integrated Workbook 2018-19

Answers

Example 9

Lauda Ltd operates a joint process from which four products arise. The
products may be sold at the separation point of the process or can be
refined further and be sold at a premium. Information regarding the products
and the refining process can be found below:

Products E F G H
Selling prices per litre ($)

At separation point 12 16 15 18

After refining costs ($) 20 23 25 22
Joint process (per litre) 8 8 8 8

Refining process:
Variable (per litre) 5 5 5 5

Specific fixed (in total) 1,000 2,000 3,000 4,000
Budgeted litres 2,000 500 5,000 6,000

The general fixed overheads in the refining process amount to $30,000.

Which products should be further processed?

403