C Ltd operates a process which produces three joint products. In the period just ended costs of production totalled £509,640. Output from the process during the period was:
$$
\begin{array}{ll}
\text { Product W } & 276,000 \mathrm{~kg} \\
\text { Product X } & 334,000 \mathrm{~kg} \\
\text { Product Y } & 134,000 \mathrm{~kg}
\end{array}
$$
There were no opening stocks of the three products. Products W and X are sold in this state. Product Y is subjected to further processing. Sales of Products W and X during the period were:
$$
\begin{array}{ll}
\text { Product W } & 255,000 \mathrm{~kg} \text { at } £ 0.945 \text { per kg } \\
\text { Product X } & 312,000 \mathrm{~kg} \text { at } £ 0.890 \text { per kg }
\end{array}
$$
During the period 128,000kg of Product Y were further processed. The balance of the period production of the three products W, X and Y remained in stock at the end of the period. The value of closing stock of individual products is calculated by apportioning costs according to weight of output.
The additional costs in the period of further processing Product Y, which is converted into Product Z, were:
$$
\begin{array}{lr}
\text { Direct labour } & £ 10,850 \\
\text { Production overhead } & £ 7,070
\end{array}
$$
A total of 96,000kg of Product Z were produced from the 128,000kg of Product Y. A by-product, BP, is also produced which can be sold for £0.12 per kg. 8,000kg of BP were produced and sold in the period.
Sales of Product Z during the period were 94,000kg, with a total revenue of £100,110. Opening stock of Product Z was 8,000kg, valued at £8,640. The FIFO method is used for pricing transfers of Product Z to cost of sales.
Selling and administration costs are charged to all main products when sold, at 10 per cent of revenue.
Required:
(a) Prepare a profit and loss account for the period, identifying separately the profitability of each of the three main products.
(b) C Ltd has now received an offer from another company to purchase the total output of Product Y (i.e. before further processing) for £0.62 per kg. Calculate the viability of this alternative.
(c) Discuss briefly the methods of, and rationale for, joint cost apportionment.