Question

The company uses trees as a material in their manufacturing and processes them into two products to the point and uses split-off calculation method (Sales value at split-off method) for defining costs. The products are sold to an intermediary who is responsible for their marketing and distribution. The following information had been collected from October:

Trees processed 350 pcs.

Production: paper 180.000 sheets, pencil cases 180.000 units

Sales: paper 185.000 sheets (price €0.10/sheet), pencil cases 185.500 units (price €0.15/unit)

The total cost of processing 350 trees into 180.000 sheets and 180.000 pencil cases is €15.500.

What is the manufacturing cost of the pencil case in euros per unit using the split off point sales value method when there were no stocks at the beginning of October?

Answer 1

The manufacturing cost of the pencil case in euros per unit using the split-off point sales value method is €0.0861.

Step-by-step explanation:

The manufacturing cost of the pencil case in euros per unit using the split-off point sales value method can be calculated by dividing the total cost of processing the trees into pencil cases by the number of pencil cases produced. In this case, the total cost of processing 350 trees into 180,000 pencil cases is €15,500. Therefore, the manufacturing cost of the pencil case in euros per unit is €15,500 / 180,000 units = €0.0861 per unit.