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Accountancy
How these cost are multiplied in 2/3 and 1/ 3 Can anyone explain me?
Answers (3)
304000 is the cost of 1 material from which we are getting 2 material i.e. MP1 and MP2. So to divide 304000 between MP1 and MP2 we are taking sales value as the ratio. So if you add total sales value is (500000+250000=750000) .. Now to calculate ratio we for MP1 we will take it's sales value and divide(will simplify to get the ratio) by total sales value(500000/750000=2/3) and same for MP2 (250000/750000=1/3) So now we have 2 ratio MP1=2/3 & MP2=1/3.
