Assume a company has three products-A, B, and C-that emerge from a joint process. The joint processing costs that are incurred up to the split-off point equal $1,200,000. The selling prices and outputs for each product at the split-off point are as follows: Product A B с Selling Price $33 per pound $29 per pound $24 per pound Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Additional Product Processing Costs $65,000 $72,000 $88,000 TEK Output 14,000 pounds 18,000 pounds 19,000 pounds Selling Price $37 per pound $34 per pound $30 per pound The company is trying to decide whether to retain or discontinue the entire joint manufacturing process. What is the financial advantage (disadvantage) of continuing to operate the entire joint manufacturing process?

Assume a company has three products-A, B, and C-that emerge from a joint process. The joint processing costs that are incurred up to the split-off point equal $1,200,000. The selling prices and outputs for each product at the split-off point are as follows: Product A B с Selling Price $33 per pound $29 per pound $24 per pound Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Additional Product Processing Costs $65,000 $72,000 $88,000 TEK Output 14,000 pounds 18,000 pounds 19,000 pounds Selling Price $37 per pound $34 per pound $30 per pound The company is trying to decide whether to retain or discontinue the entire joint manufacturing process. What is the financial advantage (disadvantage) of continuing to operate the entire joint manufacturing process?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 10CE: A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each...

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A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs 12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Required: 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. (Round the percentages to four significant digits. Round all cost allocations to the nearest dollar.) 2. What if it cost 2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products?
LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of Product Y, and 1,000 units of Product Z is $50,000. The unit sales values of the three products at the split-off point are Product X–$30, Product Y–$100, and Product Z–$90. Ending inventories include 200 units of Product X, 300 units of Product Y, and 100 units of Product Z. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their sales values at split-off. Assume that Product Z can be sold for $120 a unit if it is processed after split-off at a cost of $10 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their net realizable values.
Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $1,000,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $10,000,000. Additional information includes: Required: Determine the allocation of joint costs using the net realizable value method, rounding the sales value percentages to the nearest tenth of a percent. (Hint: Reduce the amount of the joint costs to be allocated by the amount of the by-product revenue.)
Computing joint costssales value at split-off and net realizable value methods D.L. Manufacturing Inc.s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is 20,000. The unit sales values of the three products at the split-off point are Product A20, Product B200, and Product C160. Ending inventories include 100 units of Product A, 200 units of Product B, and 300 units of Product C. a. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their sales value at split off. b. Assume that Product C can be sold for 200 a unit if it is processed after split-off at a cost of 25 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their net realizable values.
Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring 250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: An assistant in the companys cost accounting department was overheard saying ...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort. Which of the following strategies should be recommended for Oakes?
Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were 50,000, and 14,000 units of overs and 36,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, 18,000; unders, 23,040. Overs sell for 2.00 per unit; unders sell for 3.14 per unit. Required: 1. Allocate the 50,000 joint costs using the estimated net realizable value method. 2. Suppose that overs could be sold at the split-off point for 1.80 per unit. Should Pacheco sell overs at split-off or process them further? Show supporting computations.
Clarion Industries produces two joint products, Y and Z. Prior to the split-off point, the company incurred costs of $36,000. Product Y weighs 25 pounds and product Z weighs 75 pounds. Product Y sells for $150 per pound and product Z sells for $125 per pound. Based on a physical measure of output, allocate joint costs to products Y and Z.
Laramie Industries produces two joint products, H and C. Prior to the split-off point, the company incurred costs of $66,000. Product H weighs 44 pounds and product C weighs 66 pounds. Product H sells for $250 per pound and product C sells for $295 per pound. Based on a physical measure of output, allocate joint costs to products H and C.
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $45,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Product X Product Y Total Allocated joint processing costs $27,300 $ 18,200 $ 45,500 Sales value at split-off point $ 30,000 $20,000 $50,000 Costs of further processing $ 24,200 $ 18,500 $ 42,700 Sales value after further processing $ 47,800 $58,300 $ 106,100 Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d.…
JOINT PRODUCTS: Machintosh Company produces two products from a common input. Common Input Question 1 The sales value of Product A at the split-off point (without further processing) is P 60,000. The sales value of Product B at the split-off point (without further processing) is P 120,000. Product A Product B *Note: Split-off point is the juncture in the process when the products become separately identifiable. If Product A will be processed further after the split-off point, it will incur a processing cost of P 22,197, but its sales value after further processing will now be P 96,829. What will be the profit for Product A after further processing?
ABC Company produces joint products X and Y, each of which incurs separable production costs after the split-off point. Information concerning a batch produced at a joint cost of $160,000 before split-off follows: Product X Y Total Separable costs $ 14,000 25,000 $ 39,000 Sales value $ 68,000 61,000 $ 129,000 What is the joint cost assigned to product line X if costs are assigned using relative net realizable value? a. $160,000 b. $64,000 C. $90,000 d. $96,000
CUIK-983 company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $75,000 per quarter. The company allocates these costs to the Joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Quarterly Output 10,000 pounds A $ 5 per pound B $ 6 per pound 22,000 pounds C $ 14 per gallon 5,000 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Additional Product Processing Costs Selling Price A $ 53,000 B $ 38,000 C $ 18,000 Which products should be processed further? Multiple Choice Multiple Choice B and C A and C A, B, and C A and B $ 7 per pound $ 11 per pound $20 per gallon