Rs.

Material 83,110
Labour 35,320
Overheads 130,000

Particulars A B C
Output at splitoff (kgs.) 2,000 3,000 1,000
Selling price at splitoff (Rs. per kg.) 30 40 80
Additional processing costs (Rs. per kg.) 5 3 9
Selling price after further processing (Rs. per kg.) 38 45 90

A B C Total
 Joint Costs
Joint costs (costs of 1,10,000 gallons raw milk and processing to splitoff point) 4,000,000

Cream Liquid Skim

Beginning inventory 0 0
Production (gallons) 25,000 75,000
Sales (gallons) 20,000 30,000
Ending inventory 5,000 45,000
Selling price per gallons 80 40

Sales Value at Split Method

Panel A Cream Liquid Skim Total
Sales value of total production at splitoff point 2,000,000 3,000,000 5,000,000
Proportion of total sales 0.40 0.60
Joint costs allocated 1,600,000 2,400,000 4,000,000
Joint costs per gallon 64 32

Panel B Cream Liquid Skim Total

Revenue 1,600,000 1,200,000 2,800,000
COGS 1,280,000 960,000 2,240,000
Gross profit 320,000 240,000 560,000
GPM 20% 20% 20%
Ending Inventory 320000 1440000 1760000
Physical Measure Method
Panel A Cream Liquid Skim Total
Total output 25,000 75,000 100,000
Proportion of the output 0.25 0.75
Joint costs allocated 1000000 3000000 4,000,000
Joint costs per gallon 40 40

Panel B Cream Liquid Skim Total

Revenue 1,600,000 1,200,000 2,800,000
COGS 800,000 1,200,000 2,000,000
Gross profit 800,000 0 800,000
GPM 50% 0% 29%
Ending Inventory 200000 1800000 2000000
Net realisable value method Joint costs Buttercream Condensed milk
Joint Costs 40,00,000
Separable cost of processing 25,000 gallons
cream into 20,000 gallons of butter cream 2,800,000

Separable cost of processing 75,000 gallons liquid

skim into 50,000 gallons of condensed milk 5,200,000

Cream Liquid skim Buttercream Condensed milk

Beginning inventory 0 0 0 0
Production (gallons) 25,000 75,000 20,000 50,000
Transfer to further processing 25,000 75,000
Sales (gallons) 12,000 45,000
Ending inventory 0 0 8,000 5,000
Selling price per gallons 250 220

Panel A Buttercream Condensed milk Total

Final sales value 5,000,000 11,000,000 16,000,000
Separable costs 2,800,000 5,200,000 8,000,000
Net realisable value after splitoff 2,200,000 5,800,000 8,000,000
Proportion of NRV 0.275 0.725
Joint costs allocated 1,100,000 2,900,000
Production costs per gallon 195.000 162.000

Panel B Buttercream Condensed milk Total

Revenue 3,000,000 9,900,000 12,900,000
COGS 2,340,000 7,290,000 9,630,000
Gross profit 660,000 2,610,000 3,270,000
GPM 22.00% 26.36% 25.35%
Ending inventory 1560000 810000 2370000
Panel A Amount in Rs.
Sales value of total production 16000000
Total costs (joint and separable) 12000000
Gross margin 4000000
GPM 25.00%

Panel B Buttercream Condensed milk Total

Sales value of total production 5000000 11000000 16000000
Deduct gross margin 1250000 2750000 4000000
Total production costs 3750000 8250000 12000000
Separable costs 2800000 5200000 8000000
Joint costs 950000 3050000 4000000
Total production costs per gallon 187.5 165

Panel C Buttercream Condensed milk Total

Revenue 3000000 9900000 12900000
COGS 2250000 7425000 9675000
Gross profit 750000 2475000 3225000
GPM 25.00% 25.00% 25.00%
Ending inventory 1500000 825000 2325000