FUNDAMENTALS OF...(LL)-W/ACCESS>IP<
6th Edition
ISBN: 9781265724412
Author: LANEN
Publisher: MCG
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Chapter 11, Problem 74P
Effect of By-Product versus Joint Cost Accounting
Fisher Chemicals processes a liquid into three outputs: Sigma, Tau, and Upsilon. Sigma accounts for 60 percent of the net realizable value at the split-off point, Tau accounts for 30 percent, and Upsilon accounts for the balance. The joint costs total $640,000. If Upsilon is accounted for as a by-product, its $70,000 net realizable value at split-off is credited to the joint
Required
- a. What are the allocated joint costs for the three outputs
- 1. If Upsilon is accounted for as a joint product?
- 2. If Upsilon is accounted for as a by-product?
- b. Management does not understand why joint costs are allocated to Upsilon differently when it is accounted for as a by-product. Write a brief memo explaining why this occurs.
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ats
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
Product
A
B
C
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:
Output
14,000 pounds
18,000 pounds
19,000 pounds
Additional
Processing Costs
$65,000
$72,000
$88,000
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?
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
Denver Fabricators manufactures products DF1 and DF2 from a joint process, which also yields a by-product, BP. The company
accounts for the revenues from its by-product sales as other income. Additional information follows:
Units produced
Allocated joint costs
Sales value at split-off
DF1
DF2
BP
DF1
28,700
?
Joint Cost
$573,750
DF2
19,700
?
$191,250
BP
16,700
?
$ 103,700
Total
Required:
Assuming that joint product costs are allocated using the net realizable value at split-off approach, what joint costs are allocated to
each of the joint products DF1 and DF2 and to the by-product, BP?
Note: Do not round intermediate calculations.
65,100
$ 561,700
$ 868,700
Chapter 11 Solutions
FUNDAMENTALS OF...(LL)-W/ACCESS>IP<
Ch. 11 - Why do companies allocate costs? What are some of...Ch. 11 - What are the three methods of allocating service...Ch. 11 - What are the similarities and differences among...Ch. 11 - What criterion should be used to determine the...Ch. 11 - What is a limitation of the direct method of...Ch. 11 - What is a limitation of the step method of...Ch. 11 - Prob. 7RQCh. 11 - Why would a number of accountants express a...Ch. 11 - Prob. 9RQCh. 11 - What is the basic difference between the...
Ch. 11 - Prob. 11RQCh. 11 - If cost allocations arc arbitrary and potentially...Ch. 11 - Prob. 13CADQCh. 11 - Prob. 14CADQCh. 11 - Prob. 15CADQCh. 11 - Prob. 16CADQCh. 11 - Prob. 17CADQCh. 11 - Prob. 18CADQCh. 11 - What are some of the factors that a company needs...Ch. 11 - Prob. 20CADQCh. 11 - Prob. 21CADQCh. 11 - Prob. 22CADQCh. 11 - How is joint cost allocation like service...Ch. 11 - Prob. 24CADQCh. 11 - In what ways is joint cost allocation similar to...Ch. 11 - Why Are Costs Allocated?Ethical Issues You are the...Ch. 11 - Cost Allocation: Direct Method Caro Manufacturing...Ch. 11 - Allocating Service Department Costs First to...Ch. 11 - Cost Allwat ion: Direct Method University Printers...Ch. 11 - Prob. 30ECh. 11 - Cost Allocation: Step Method
Refer to the data for...Ch. 11 - Cost Allocation: Reciprocal Method
Refer to the...Ch. 11 - Cost Allocation: Reciprocal Method, Two Service...Ch. 11 - Cost Allocation: Reciprocal Method
Refer to the...Ch. 11 - Prob. 35ECh. 11 - Prob. 36ECh. 11 - Prob. 37ECh. 11 - Prob. 38ECh. 11 - Prob. 39ECh. 11 - Prob. 40ECh. 11 - Net Realizable Value Method: Multiple Choice
Oak...Ch. 11 - Sell or Process Further: Multiple Choice
Refer to...Ch. 11 - Net Realizable Value Method Euclid Corporation...Ch. 11 - Estimated Net Realizable Value Method Blasto,...Ch. 11 - Net Realizable Value Method to Solve for Unknowns...Ch. 11 - Net Realizable Value Method Bixel Components...Ch. 11 - Net Realizable Value Method with By-Products...Ch. 11 - Net Realizable Value Method Deming Sons...Ch. 11 - Physical Quantities Method
Refer to the facts in...Ch. 11 - Sell or Process Further
Refer to the facts in...Ch. 11 - Physical Quantities Method The following questions...Ch. 11 - Physical Quantities Method; Sell or Process...Ch. 11 - Physical Quantities Method with By-Product...Ch. 11 - Step Method with Three Service Departments Model,...Ch. 11 - Comparison of Allocation Methods BluStar Company...Ch. 11 - Solve for Unknowns: Direct Method Franks Foods has...Ch. 11 - Solve for Unknowns: Step Method RT Renovations is...Ch. 11 - Cost Allocation: Step Method with Analysis and...Ch. 11 - Prob. 59PCh. 11 - Prob. 60PCh. 11 - Direct, Step, and Reciprocal Methods:...Ch. 11 - Cost Allocation: Step and Reciprocal Methods...Ch. 11 - Allocate Service Department Costs: Direct and Step...Ch. 11 - Prob. 64PCh. 11 - Prob. 65PCh. 11 - Prob. 66PCh. 11 - Prob. 67PCh. 11 - Prob. 68PCh. 11 - Fletcher Fabrication, Inc., produces three...Ch. 11 - Findina Missing Data: Net Realizable Value Spartan...Ch. 11 - Finding Missing Data: Net Realizable Value Blaine,...Ch. 11 - Joint Costing in a Process Costing Context:...Ch. 11 - Find Maximum Input Price: Estimated Net Realizable...Ch. 11 - Effect of By-Product versus Joint Cost Accounting...Ch. 11 - Prob. 75PCh. 11 - Prob. 76P
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