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    Session # 7: Lilac Flour Mills: Joint Product and By-Product Costing

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    PRITEE
    1. Lilac Flour Mills processes 36 tons of wheat per day into various products including 60% white flour, 10% suji, 10% wholemeal flour, and 20% bran. The company has a stockpile of 2,000 tons of bran valued at Rs. 37,32,000. 2. Offers have been made to purchase the stored bran, with prices ranging from Rs. 1,000 to Rs. 1,350 per ton, with the most recent offer being Rs. 1,140 per ton. 3. Lilac's policy is not to sell any product below its full production cost. Exhibits provide calculations of production costs for each product using different allocation methods to

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    Session # 7: Lilac Flour Mills: Joint Product and By-Product Costing

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    PRITEE
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    1. Lilac Flour Mills processes 36 tons of wheat per day into various products including 60% white flour, 10% suji, 10% wholemeal flour, and 20% bran. The company has a stockpile of 2,000 tons of bran valued at Rs. 37,32,000. 2. Offers have been made to purchase the stored bran, with prices ranging from Rs. 1,000 to Rs. 1,350 per ton, with the most recent offer being Rs. 1,140 per ton. 3. Lilac's policy is not to sell any product below its full production cost. Exhibits provide calculations of production costs for each product using different allocation methods to

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    Session 7 Lilac SV

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    1. Lilac Flour Mills processes 36 tons of wheat per day into various products including 60% white flour, 10% suji, 10% wholemeal flour, and 20% bran. The company has a stockpile of 2,000 tons of bran valued at Rs. 37,32,000. 2. Offers have been made to purchase the stored bran, with prices ranging from Rs. 1,000 to Rs. 1,350 per ton, with the most recent offer being Rs. 1,140 per ton. 3. Lilac's policy is not to sell any product below its full production cost. Exhibits provide calculations of production costs for each product using different allocation methods to

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    61 views8 pages

    Session # 7: Lilac Flour Mills: Joint Product and By-Product Costing

    Uploaded by

    PRITEE
    1. Lilac Flour Mills processes 36 tons of wheat per day into various products including 60% white flour, 10% suji, 10% wholemeal flour, and 20% bran. The company has a stockpile of 2,000 tons of bran valued at Rs. 37,32,000. 2. Offers have been made to purchase the stored bran, with prices ranging from Rs. 1,000 to Rs. 1,350 per ton, with the most recent offer being Rs. 1,140 per ton. 3. Lilac's policy is not to sell any product below its full production cost. Exhibits provide calculations of production costs for each product using different allocation methods to

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    Session # 7: Lilac Flour Mills

    Joint product and


    By-product costing
    2,000 tons of Bran,
    Stock of Bran accumulating
    Value: Rs 37,32,000

    Range of price/ ton: Rs 1,000


    Offers for purchase of Bran
    to Rs 1,350, recent : Rs 1,140

    Problem Lilac’s policy


    Not to sell any product at

    Statement a price below full cost

    60% White flour, 10%


    Average yield from a ton of
    Suji, 10% Wholemeal
    wheat
    flour, 20% Bran

    Bran percentage
    Efforts
    minimum
    Per day processing
    36 tons of wheat

    Bran yield
    Bran 0.2 tons of Bran per ton wheat
    Production
    Daily Bran production
    7.2 tons
    In stock
    2000 ton of Bran @ Rs. 1,866/ton
    Customers

    White flour, suji, and Bran


    wholemeal flour

    1. Direct household consumers Cattle feed by livestock


    breeding centers
    2. Industrial units
    Or
    Biscuit manufacturers
    Bread bakeries Process further to extract
    wheat bran oil
    Exhibit II:
    Calculation of average unit product cost based on production quantities

    Monthly input of wheat= 36 Tons per day for 25 days =900 T


    Qty. Prod Sep. Total P/L P/L on Total
    Product J. C. allocated JC /T S. P./T
    tons in % Cost/T cost/T per T Prod.

    White Flour 540 60 999,000 1850 78 1,928 2,100 172 92,880

    Suji 90 10 166,500 1850 84 1,934 2,480 546 49,140


    Wholemeal
    Flour
    90 10 166,500 1850 34 1,884 2,000 116 10,440

    Bran 180 20 333,000 1850 16 1,866 1,140 -726 -130,680

      900 100 1,665,000 1,850         21,780


    Exhibit III: Calculation of average unit product cost based on Relative
    Market Sales Value
    Monthly input of wheat= 36 T per day for 25 days =900 T
    % of Total Sep. P&L
    Product Qty. S. P./T Net Sales J.C. allocated J.C./T T C /T Total P/L
    Sales Cost/T /T
    White
    Flour
    540 2,100 1,134,000 65.08 1,083,626 2,007 78 2,085 15 8,254
    Suji 90 2,480 223,200 12.81 213,285 2,370 84 2,454 26 2,355
    Wholemeal
    Flour
    90 2,000 180,000 10.33 172,004 1,911 34 1,945 55 4,936
    Bran 180 1,140 205,200 11.78 196,085 1,089 16 1,105 35 6,235
      900   1,742,400 100.00 1,665,000         21,780
    Selling price at split off point
    Joint Cost Rs. lakh Separable
    SP/ ton
    costs
    Wheat 15.84
    Other Joint costs 0.81
    60%: White flour Rs 78 Rs 2,100

    16.65
    10%: Suji Rs 84 Rs 2,480

    10%: Wholemeal
    flour Rs 34 Rs 2,000

    20%: Bran Rs 16 Rs 1,140

    A B C
    Before Split-off After processing
    processing
    Calculation of average unit product cost
    based on Relative Market Sales Values before split off point
    Monthly input of wheat= 36 T per day for 25 days =900T
    Sep.
    Market NRV at P&L
    Product Qty cost total value % of t v J.C allocated J. C /T TC Total P/L
    S.P./T split off /T
    /T
      Tons  A  B  A-B=C              
    White
    Flour
    540 2100 78 2,022 1,091,880 64.73 1,077,781 1,996 2,074 26 14,099
    Suji 90 2480 84 2,396 215,640 12.78 212,856 2,365 2,449 31 2,784
    Wholemeal
    Flour
    90 2000 34 1,966 176,940 10.49 174,655 1,941 1,975 25 2,285
    Bran 180 1140 16 1,124 202,320 11.99 199,708 1,109 1,125 15 2,612
      900       1,686,780 100 1,665,000       21,780

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