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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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![Tulsa Milling buys oats at $0.60 per pound and produces TPM Oat Flour, TPM Oat Flakes, and TPM Oat Bran. The process of separating the oats into oat flour and oat bran costs $0.30 per pound. The oat flour can be sold for $1.50 per pound, the oat bran for $2.00 per pound.
Each pound of oats has 0.2 pounds of oat bran and 0.8 pounds of oat flour. A pound of oat flour can be made into oat flakes for a fixed cost of $240,000 plus a variable cost of $0.60 per pound. Tulsa Milling plans to process 1 million pounds of oats in 20X0, at a purchase price of
$600,000.
Requirements
1. Allocate all the joint costs to oat flour and oat bran using the physical-units method.
2. Allocate all the joint costs to oat flour and oat bran using the relative-sales-value method.
3. Suppose there were no market for oat flour. Instead, it must be made into oat flakes to be sold. Oat flakes sell for $2.90 per pound. Allocate the joint cost to oat bran and oat flakes using the relative-sales-value method.
Requirement 1. Allocate all the joint costs to oat flour and oat bran using the physical-units method. (Round the weighting to three decimal places.)
Allocation of
joint costs
Oat flour
Oat bran
Requirement 2. Allocate all the joint costs to oat flour and oat bran using the relative-sales-value method. (Round the weighting to three decimal places.)
Relative sales value
Allocation of
at split-off
joint costs
Oat flour
Oat bran
Pounds Weighting
Oat flakes
Oat bran
Weighting
Requirement 3. Suppose there were no market for oat flour. Instead, it must be made into oat flakes to be sold. Oat flakes sell for $2.90 per pound. Allocate the joint cost to oat bran and oat flakes using the relative-sales-value method. (Round the weighting to three
decimal places.)
Relative sales value
at split-off
Weighting
Allocation of
joint costs
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Transcribed Image Text:Tulsa Milling buys oats at $0.60 per pound and produces TPM Oat Flour, TPM Oat Flakes, and TPM Oat Bran. The process of separating the oats into oat flour and oat bran costs $0.30 per pound. The oat flour can be sold for $1.50 per pound, the oat bran for $2.00 per pound.
Each pound of oats has 0.2 pounds of oat bran and 0.8 pounds of oat flour. A pound of oat flour can be made into oat flakes for a fixed cost of $240,000 plus a variable cost of $0.60 per pound. Tulsa Milling plans to process 1 million pounds of oats in 20X0, at a purchase price of
$600,000.
Requirements
1. Allocate all the joint costs to oat flour and oat bran using the physical-units method.
2. Allocate all the joint costs to oat flour and oat bran using the relative-sales-value method.
3. Suppose there were no market for oat flour. Instead, it must be made into oat flakes to be sold. Oat flakes sell for $2.90 per pound. Allocate the joint cost to oat bran and oat flakes using the relative-sales-value method.
Requirement 1. Allocate all the joint costs to oat flour and oat bran using the physical-units method. (Round the weighting to three decimal places.)
Allocation of
joint costs
Oat flour
Oat bran
Requirement 2. Allocate all the joint costs to oat flour and oat bran using the relative-sales-value method. (Round the weighting to three decimal places.)
Relative sales value
Allocation of
at split-off
joint costs
Oat flour
Oat bran
Pounds Weighting
Oat flakes
Oat bran
Weighting
Requirement 3. Suppose there were no market for oat flour. Instead, it must be made into oat flakes to be sold. Oat flakes sell for $2.90 per pound. Allocate the joint cost to oat bran and oat flakes using the relative-sales-value method. (Round the weighting to three
decimal places.)
Relative sales value
at split-off
Weighting
Allocation of
joint costs
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