Neco Model Questions Vol1 2023 Economics Question 4

Practice essay / theory question 4 from the 2023 Neco Model Questions Vol1 Economics examination. This question covers Production .

Neco Model Questions Vol1 2023 Economics Essay / Theory

Topic: Production

Question 4 NECO_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • essay

A small‑scale bakery produces two products separately. The data for one month are: • Bread: 2,000 loaves produced, total cost ₦500,000. • Pastries: 1,500 pieces produced, total cost ₦450,000. The bakery is considering joint production in a shared kitchen. The combined monthly cost of joint production is estimated at ₦880,000. Market prices are ₦300 per loaf of bread and ₦400 per pastry.

Question Parts

( a )

Determine the average (unit) cost of each product when produced separately.

( b )

Allocate the joint production cost to each product using the step‑down method, allocating first to the product with the larger proportion of total output value (use the given market prices). Show the allocation amounts.

( c )

Calculate the new average cost per unit for each product after the joint production allocation.

( d )

Discuss two advantages and two disadvantages of adopting joint production for the bakery.

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About This Question

This is Neco Model Questions Vol1 2023 Economics Question 4. It is one of the essay questions from the 2023 Neco Model Questions Vol1 Economics examination.

The question covers Production .

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