Sterling Industries manages various manufacturing processes. In process I, joint products P1 and P2 are produced in the ratio of 6:4 in units from…
CA Intermediate · Cost and Management Accounting · RTP · May 2025
Sterling Industries manages various manufacturing processes. In process I, joint products P1 and P2 are produced in the ratio of 6:4 in units from the raw material input. A normal loss of 2% of the raw material input is expected in this process, with losses having a realizable value of 12.5 per kg. The company has no work in progress. The joint costs are apportioned between the joint products using the physical measure basis. The following information relates to process I for last month: Raw materials input 75,000 kg (at a cost of 4,76,250) Direct labour 2,25,000 Direct expenses 67,500 Production Overheads 110% of direct labour cost Abnormal gain 1,250 kg You are required to CALCULATE the number of unit and its value of the Normal loss, Abnormal gain and joint products P1 & P2.
Suggested Answer and Working Notes:
Correct Answer: Option (C)
Normal loss: 1,500 units - 18,750; Abnormal gain: 1,250 units - 16,964; Product P1: 44,850 units - 6,08,678 and Product P2: 29,900 units - 4,05,786.
Topics: Employee Cost & Direct Expenses, Overheads - Absorption Costing Method
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