AccountingCosting

Question 1
One of your colleagues at FUI named June is concerned whether what she has done something wrong or not
at work. June is a management accountant working at FUI, and one of June’s close family members owns a
small company, Company A, which provides service to FUI. When preparing the performance report for the
service providers, June noticed Company A was underperforming, and it was likely to have its contract
terminated by FUI. Before finalising the performance report, June calls her relative and tells him regarding the
report she is preparing, and the risk Company A might have its contract terminated. She also tells her relative
what the other service providers are doing for avoiding being underperforming and keeping their contracts
with FUI.
Required
Please state two of the ethical standards, as provided by the Institute of Management Accountants (IMA)
Statement of Ethical Professional Practice1
, which are being jeopardized and justify why these two standards
are being jeopardized. Please explain how June could help her relative without jeopardizing these two ethical
standards. (For an answer with more than two ethical standards the first two standards will be marked, and
the remainder will be ignored). (Chapter 1, 10 marks)
1
This is the additional reading for this unit. A copy of the document is available at https://www.imanet.org/insights-and-trends/businessleadership-and-ethics/ima-statement-of-ethical-professional-practice
Page 5 of 9

Question 2
Deliziosa Purea & Succhi (DP&S) has a whole plant for processing tomatoes. The plant processes tomatoes into
tomato sauce, tomato paste, and tomato puree. As part of the cost planning and cost control of operations
and activities, FUI is currently reviewing the gross-margin percentage of each of its products, using the
estimated net realisable value (NRV) method for allocating joint costs. The company processes tomatoes in
Department #1, out of which come three products: tomato sauce, tomato paste, and tomato puree. Processing
700,000 kg in Department #1 results in 50,000 kg of tomato sauce, 300,000 kg of tomato paste and 100,000
kg of tomato puree, and the costs in Department #1 are $400,000 in total.
Tomato paste is sold without further processing. Tomato sauce is processed further through Department #2
and the costs are $50,000. Tomato puree is considered a by-product and is processed further through
Department #3 and the costs are $13,000. Tomato sauce sells for $4 per kg, tomato paste sells for $2 per kg,
and tomato puree sells for $3 per kg.
Required
a) Calculate the gross-margin percentage of each product using unit costs per kilogram for tomato sauce,
tomato paste, and tomato puree, treating tomato puree as a by-product. Deduct the estimated NRV
of the by-product produced from the joint cost of tomato sauce and tomato paste. (e.g., Exercise 6.15,
Chapter 6, 10 marks)
b) Calculate the gross-margin percentage of each product using unit costs per kilogram for tomato sauce,
tomato paste, and tomato puree, treating all three as joint products. (e.g., Exercise 6.15, Chapter 6,
10 marks)