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-   -   How to answer this by-product costing problem, please help! (https://www.askmehelpdesk.com/showthread.php?t=517227)

  • Oct 16, 2010, 05:14 AM
    solve
    How to answer this by-product costing problem, please help!!
    Mandarin Corp. manufactures one main product known as MP and a by-product BP. MP sells for 6000 per ton. mktg. and administrative costs are 25% of the selling price. This product is made from 3 ingredients,A,B,C in the ff proportions and at the following costs:
    A-50%@ 2500 per ton of A,
    B-20%@ 1200 per ton of B,
    C-30% @ 1500 per ton of C.
    Handling and storage charges amount to 12% of the cost of each ingredient. The plant is divided into 5 mfg departments, of which 1,2,3 and 4 are engaged in the manufacture of MP and 5 in the recovery of BP.

    The following data show the cost of direct labor per ton of ingredients handled and the percentages of the departmental factory expense to direct labor.

    Department direct labor per ton %of departmental factory expense to Direct Labor
    1 175 70%
    2 350 280%
    3 240 110%
    4 150 60%

    Materil a,b,c are put into process in dept 1. production is done in batches that will yield 30 tons at the end of processing of MP in dept 4. General factory exp that can't be charged to any one dept amount to 50% of the deprtmental direct labor cost for each dept.


    In dept 2,there is a yoeld of only 80% of MP from the tonnage of the ingredients mixed. The other 20% is treated in dept 5,two thirds of this 20% being recovered as the by product BP, and the other third being waste.

    A net profit of 65 per ton is made on the sale of BP after all expenses of every kind are charged against it. This profit is deducted from the total production cost of the main product. No charge is made against BP for the raw materials from which it is recovered.

    in dept 3, there is a loss of 15% in the mixtured received from dept. 2 while 10% becomes waste which is sold at 24 per ton. No loss is incurred in dept 4

    Required: diagram showing the flow of manufacturing process
    Calculate the net profit for every ton of MP sold..

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