Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 16, Problem 16.29E
Accounting for a main product and a byproduct. (Cheatham and Green, adapted) Crispy, Inc., is a producer of potato chips. A single production process at Crispy, Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs.
For September 2017, the cost of operations is $520,000. Production and sales data are as follows:
There were no beginning inventories on September 1, 2017.
- 1. What is the gross margin for Crispy, Inc., under the production method and the sales method of byproduct accounting?
Required
- 2. What are the inventory costs reported in the
balance sheet on September 30, 2017, for the main product and byproduct under the two methods of byproduct accounting in requirement 1? - 3. Prepare the
journal entries to record the byproduct activities under (a) the production method and (b) the sales method. Briefly discuss the effects on the financial statements.
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Accounting for a main product and a byproduct (Cheatham and green, adapted)Crispy,Inc., is a producer of potato chips. A single production process at crispy, Inc., yields potato chips as the main product, as well as byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs.
For September 2017, the cost of operations is $520,000. Production and sales data are as follows:
Tasty, Inc., is a producer of potato chips. A single production process at Tasty, Inc., yields
potato chips as the main product and a byproduct that can also be sold as snack. Both
products are fully processed by the splitoff point, and there are no separable costs.
For September 2022, the cost of operation is $300,000. Production and sales data are as
follows:
Main Product:
Potato Chips
Byproduct
Production (in pounds) Sales (in pounds)
Main products:
Byproducts:
80,000
8,000
72,000
6,000
Selling Price per Pound
There were no beginning inventories on September 1, 2022.
What are the inventory costs reported in the balance sheet on September 30, 2022, for the
main product and byproduct under the production method and the sales method of byproduct
accounting?
The production method
$20
$5
The sales method
Yum, Inc. is a producer of potato chips. A single production process at
Yum, Inc., yields potato chips as the main product, as well as a byproduct that can be sold as a snack. Both products are fully processed by the splitoff point, and there are no separable costs. For September 2020, the cost of operations is $485,000. Production and sales data are as follows:
Note: There were no beginning inventories on September 1, 2020.
Requirements
Dialog content starts
1.
What is the gross margin forbYum,Inc., under the production method and the sales method of byproduct accounting?
2.
What are the inventory costs reported in the balance sheet on September 30, 2020, for the main product and byproduct under the two methods of byproduct accounting in requirement 1?
3.
Prepare the journal entries to record the byproduct activities under (a) the production method and (b) the sales method. Briefly discuss the effects on the financial statements.
Chapter 16 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7QCh. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...
Ch. 16 - Why is the constant gross-margin percentage NRV...Ch. 16 - Managers must decide whether a product should be...Ch. 16 - Prob. 16.13QCh. 16 - Describe two major methods to account for...Ch. 16 - Why might managers seeking a monthly bonus based...Ch. 16 - Prob. 16.16MCQCh. 16 - Joint costs of 8,000 are incurred to process X and...Ch. 16 - Houston Corporation has two products, Astros and...Ch. 16 - Dallas Company produces joint products, TomL and...Ch. 16 - Earls Hurricane Lamp Oil Company produces both A-1...Ch. 16 - Joint-cost allocation, insurance settlement....Ch. 16 - Joint products and byproducts (continuation of...Ch. 16 - Net realizable value method. Sweeney Company is...Ch. 16 - Alternative joint-cost-allocation methods,...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Prob. 16.26ECh. 16 - Joint-cost allocation, sales value, physical...Ch. 16 - Joint-cost allocation: Sell immediately or process...Ch. 16 - Accounting for a main product and a byproduct....Ch. 16 - Joint costs and decision making. Jack Bibby is a...Ch. 16 - Joint costs and byproducts. (W. Crum adapted)...Ch. 16 - Methods of joint-cost allocation, ending...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Comparison of alternative joint-cost-allocation...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Joint-cost allocation. SW Flour Company buys 1...Ch. 16 - Further processing decision (continuation of...Ch. 16 - Joint-cost allocation with a byproduct. The...Ch. 16 - Byproduct-costing journal entries (continuation of...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Prob. 16.41PCh. 16 - Prob. 16.42PCh. 16 - Methods of joint-cost allocation, comprehensive....
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