Reference no: EM133093413

Question - Arimo-MR Miners Inc. (A-MRMI) produces products - Beta and Gita in a single joint manufacturing process. The total cost of input and joint manufacturing process is estimated to be $500,000 for 2021. During the year the company expects to produce 3,000 units of Beta and 12,000 units of Gita. The company has an option to sell products Beta and Gita at the split-off point for $20 and $15 per unit respectively.

Required -

1. Allocate the joint manufacturing cost to Beta and Gita using the physical unit method.

2. Allocate the joint manufacturing cost to Beta and Gita using the sales value method.

3. A new customer approached A-MRMI and offered to buy product Gita at a price of $20 per unit provided the company agrees to further process the product. The accountant of A-MRMI advised that the cost of further processing product Gita would amount to $40,000. As a qualified management accountant, you are required to advise A-MRMI whether to accept the offer and process product Gita further or reject the offer and sell it at the split-off point. Show computations to support your answer.