Estimated Net Realizable Value Method
Blasto, Inc., operates several mines. At one, a typical batch of ore run through the plant yields three products: lead, copper, and manganese. At the split-off point, the intermediate products cannot be sold without further processing. The lead from a typical batch sells for $40,000 after incurring additional
Required
Use the estimated net realizable value method to allocate the joint processing costs.
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Fundamentals Of Cost Accounting (6th Edition)
- Current Attempt in Progress Martinez Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the Metals division. The Metals division processes the toldine into an alloy and sells it to customers at a price of $152 per barrel. Martinez currently requires the Mining division to transfer its total annual output of 412.500 barrels of toldine to the Metals division at total manufacturing cost plus 10%. Unlimited quantities of toldine can be purchased and sold on the open market at $91 per barrel. While the Mining division could sell all the toldine it produces on the open market at $91 per barrel, it would incur a variable selling cost of $5 per unit to do so. Barker Jonas, manager of the Mining division, is unhappy with having to transfer the division's entire output of toldine to the Metals division at 110% of cost. In a meeting with the management of Martinez, he protested, "Why should…arrow_forwardDifferential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,500 per ton, and ingot can be sold without further processing for $1,250 per ton. Ingot is produced in batches of 83 tons by smelting 550 tons of bauxite, which costs $106 per ton of bauxite. Rolled aluminum will require additional processing costs of $630 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum. Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). If required, do not round interim calculations. If required, use a minus sign to indicate a loss. Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 Process Differential Sell Ingot Further into Effects (Alternative 1) Rolled…arrow_forwardDifferential Analysis for Further Processing The management of International Aluminum Co. is considering whether to process aluminum ingot further into rolled aluminum. Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton. Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Required: 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum (Alternative 2). Differential Analysis Sell Ingot (Alt. 1) or Process Further into Rolled Aluminum (Alt. 2) February 5 SellIngot(Alternative 1) ProcessFurther intoRolledAluminum(Alternative 2) DifferentialEffecton Income(Alternative 2) Revenues, per…arrow_forward
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