Create a spreadsheet to solve the following joint cost problem. Joint cost allocation: additional processing beyond split-off Point ABC Company produces three joint products: A, B and C. The material is added at the beginning of the process. At the end of Process 1, the split-off point, the three intermediate products enter three separate further processes. Product A enters Process 2, Product B enters Process 3 and Product C enters Process 4. None of the products can be sold unless the subsequent processing is carried out. The following information relates to the month of June:

• Direct material issued to Process 1, $26 000.
• Conversion costs incurred: Labour Overhead Process 1 $10 000 $14 000 Process 2 3 000 2 000 Process 3 1 000 1 000 Process 4 600 400
• There was no work in process at the beginning or end of the month, and no finished goods inventories at the beginning of the month.

2. A. Solve using a spreadsheet. See the requirements embedded in the spreadsheet. Include the IF function to determine Favourable and Unfavourable variances.
3. Prepare a Business Report as if for senior management:
4. Critically evaluate the purpose of variance analysis,
5. Explain why the materials price variance should be calculated on purchase,
6. Identify other areas in an organization where variance analysis would be useful and
7. Evaluate the practical relevance of detailed overhead variance analysis.

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