Looks like a GCSE business studies question. How old is the question? I very much doubt you can sell £3600 for 1200 litres of Basil sauce at a profit (£3 per litre - bargain by today's standards)
a) Normal loss is 25% less of the regular 3000 litres. Current output is 2400 litres. Wouldn't call it abnormal.
b) You're looking for unallocated costs. None are mentioned, but they have mentioned the rates for unallocated costs i.e. "£0.10 per litre for basil, and £0.05 per litre for Chilli and for Garlic" - The rates are done on by volume basis anyway.
c) Total joint costs by the rate and volume mentioned in b.
Find the total sales from the figures in the question i.e. Basil 1,200 litres £3,600 Chilli 800 litres £3,000 Garlic 400 litres £900. Use ratios to find the proprotion of sales for the ingredient i.e. Garlic: £900/total sales
Multiply the ratio by the total joint cost
d) Volume vs sale; what is more fair? How is the unallocated cost generated? What is the second process? Is it related more to sales or production?
a) Normal loss is 25% less of the regular 3000 litres. Current output is 2400 litres. Wouldn't call it abnormal.
b) You're looking for unallocated costs. None are mentioned, but they have mentioned the rates for unallocated costs i.e. "£0.10 per litre for basil, and £0.05 per litre for Chilli and for Garlic" - The rates are done on by volume basis anyway.
c) Total joint costs by the rate and volume mentioned in b.
Find the total sales from the figures in the question i.e. Basil 1,200 litres £3,600 Chilli 800 litres £3,000 Garlic 400 litres £900. Use ratios to find the proprotion of sales for the ingredient i.e. Garlic: £900/total sales
Multiply the ratio by the total joint cost
d) Volume vs sale; what is more fair? How is the unallocated cost generated? What is the second process? Is it related more to sales or production?
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