Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 16, Problem 16.34P
Comparison of alternative joint-cost-allocation methods, further-processing decision, chocolate products. The Rich and Creamy Edibles Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately identifiable at a single splitoff point. Every 600 pounds of cocoa beans yields 20 gallons of chocolate-powder liquor base and 60 gallons of milk-chocolate liquor base.
The chocolate-powder liquor base is further processed into chocolate powder. Every 20 gallons of chocolate-powder liquor base yield 680 pounds of chocolate powder. The milk-chocolate liquor base is further processed into milk chocolate. Every 60 gallons of milk-chocolate liquor base yield 1,100 pounds of milk chocolate.
Production and sales data for August 2017 are as follows (assume no beginning inventory):
- Cocoa beans processed, 27,600 pounds
- Costs of processing cocoa beans to splitoff point (including purchase of beans), $70,000
Rich and Creamy Edibles Factory fully processes both of its intermediate products into chocolate powder or milk chocolate. There is an active market for these intermediate products. In August 2017, Rich and Creamy Edibles Factory could have sold the chocolate-powder liquor base for $21 a gallon and the milk-chocolate liquor base for $28 a gallon.
- 1. Calculate how the joint costs of $70,000 would be allocated between chocolate powder and milk chocolate under the following methods:
Required
- a. Sales value at splitoff
- b. Physical measure (gallons)
- c. NRV
- d. Constant gross-margin percentage NRV
- 2. What are the gross-margin percentages of chocolate powder and milk chocolate under each of the methods in requirement 1?
- 3. Could Rich and Creamy Edibles Factory have increased its operating income by a change in its decision to fully process both of its intermediate products? Show your computations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Charlie's Chocolate Factory manufactures chocolate bars
and ships them directly to wholesalers and retailers
across the country. The company has two product lines:
milk chocolate bars and chocolate covered almonds.
Classify the following company's expenses if the cost
object is a single product line (either milk chocolate bars
or chocolate covered almonds). The cost of cocoa used in
the factory. Question 11 options: A) Indirect product cost.
B) Direct period cost. C) Direct product cost. D) Indirect
period cost.
Kelp Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point or be processed further. If they are processed further, the resulting products can be sold as delicacies to health food stores. Cost and revenue information is as follows.
Sales Value and AdditionalCosts If Processed Further
Product
PoundsProduced
Sales Value at Split-Off
Final SalesValue
AdditionalCost
Sea Tea
9,000
$
60,000
$
90,000
$
35,000
Sea Paste
5,300
86,900
160,000
50,000
Sea Powder
2,000
70,000
85,000
14,000
Required:
a-1. Compute the incremental benefit (cost) of further processing to these products.
a-2. Which products should Kelp process beyond the split-off point?
b. What is the selling price per pound of Sea Paste at the split-off point at which the company is indifferent?
The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the
three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split - off point in this joint process, and the output is the three types of beans. The
beans can be sold at the split - off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional, separable processing costs, as
shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three
products were processed beyond split - off. Joint production costs for the year were $160,000,000. Sales values and costs needed to evaluate Bean's production policy follow: Premium Gourmet
Quality Total Pounds…
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....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional, separable processing costs, as shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $155,000,000. Sales values and costs needed to evaluate Bean's production policy follow: Pounds produced Separable processing cost Pounds…arrow_forwardThe Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional separable processing costs, as shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $90,000,000. Sales values and costs needed to evaluate Bean's production policy follow: Premium Gourmet Quality Total Pounds produced…arrow_forwardThe Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional separable processing costs, as shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processedbeyond split-off. Joint production costs for the year were $90,000,000.Sales values and costs needed to evaluate Bean’s production policy follow: Premium…arrow_forward
- Calculate product costs assuming this company decided to make and sell as much maple sugar as possible after filing all syrup orders (i.e. it regarded syrup and sugar as joint products). Use sale value method.arrow_forwardAlternative joint-cost-allocation methods, further process decision. The Tempura spirits Company produces two products – methanol (wood alcohol) and turpentine—by a joint process. Joint costs amount to $ 124,000 per batch of output. Each batch totals 9,500 gallons:25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol,$4 per gallon, and turpentine,$2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon.arrow_forwardBreakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows: Quantity at Joint Cost Cereal Split-Off Point $45,000 Yummies 19,200 kilograms Sales Price per Kilogram $3.30 Crummies 4,800 kilograms 3.80 Required: Use the physical-units method to allocate the company's joint production cost between Yummies and Crummies. (Do not round intermediate calculations.) Yummies Crummies Allocation of Joint Costarrow_forward
- Beans Corp. is a dairy manufacturer and processes two different products that can either be sold as is or processed further. Listed below are sales and additional data per unit: Product Sales price ‘As Is’ Additional Costs if processed further Sales price if processed further Milk $4.00 $1.90 $5.25 Cream $2.75 $0.15 $3.00 Based on the above information, which product(s) should Beans Corp. decide to process further?arrow_forwardAlternative joint-cost-allocation methods, further-process decision. The Tempura Spirits Company produces two products —methanol (wood alcohol) and turpentine—by a joint process. Joint costs amount to $124,000 per batch of output. Each batch totals 9,500 gallons: 25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol, $4 per gallon, and turpentine, $2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon.arrow_forwardCrazy Delicious Inc. produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (5,000 bars) are as follows: Determine the standard direct materials cost per bar of chocolate.arrow_forward
- I am stuck with calculating the rst of the problem Cost of Production ReportBavarian Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process account of the Blending Department at October 31:ACCOUNT Work in Process—Blending DepartmentACCOUNT NO.DateItemDebitCreditBalanceDebitCreditOct.1Bal., 2,300 units, 3/5 completed46,36831Direct materials, 26,000 units429,000475,36831Direct labor100,560575,92831Factory overhead48,480624,40831Goods transferred, 25,700 units? 31Bal., ? units, 1/5 completed?Required:1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Blending Department. If an…arrow_forwardQuestion 1) Crazy Delicious Inc. produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard cost for a batch of chocolate (2,880 bars) are as follows: Ingredient Quantity Price Cocoa 540lbs $0.30 per lb. Sugar 150lbs $0.60 per lb. Milk 120gal $1.50 per gal. Determine thte standard direct materials cost per bar of chocolate. If required, round to the nearest cent. $_______ per bar __________________________________________________________ Question 2) Refer to the picturearrow_forwardJoint-cost allocation, sales value , physical measure, NRV methods. Tasty foods produces two types of microwavable products: beef- flavored ramen and shrimp- flavored . The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which tasty dumps at negligible costs in a local drainage area. In June 2017, the following data were reported for the production and sales of beef- flavored and shrimp-flavored ramen: Due to the popularity of its microwavable products, Tasty decides to add a new line of products that targets dieters. These new products are produced by adding a special ingredient to dilute the original ramen and are to be sold under the names special B and special S, respectively. Following are the monthly data for all the products:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Incremental Analysis - Sell or Process Further; Author: Melissa Shirah;https://www.youtube.com/watch?v=7D6QnBt5KPk;License: Standard Youtube License