Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 17, Problem 27P
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $300,000 and results in 60,000 units of MSB and 90,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $4.
Required:
- 1. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis.
- 2. Calculate the amount of joint cost allocated to the mine support braces (MSB) on a relative-sales-value basis.
- 3. Assume the commercial building lumber is not marketable at split-off but must be further planed and sized at a cost of $200,000 per production run. During this process, 10,000 units are unavoidably lost; these spoiled units have no value. The remaining units of commercial building lumber are saleable at $10 per unit. The mine support braces, although saleable immediately at the split-off point, are coated with a tarlike preservative that costs $100,000 per production run. The braces are then sold for $5 each. Using the net-realizable-value basis, compute the completed cost assigned to each unit of commercial building lumber.
- 4. If Snake River Sawmill chose not to process the mine support braces beyond the split-off point, the contribution from the joint milling process would increase or decrease by what amount?
- 5. Did you use the joint cost allocation results in answering requirement (4)? If so, how? Why did you use or not use the allocation results?
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Northwest Building Products (NBP) manufactures two lumber products from a joint milling process: residential building lumber (RBL) and commercial building lumber (CBL). A standard production run incurs joint costs of $486,000 and results in 86,400 units of RBL and 129,600 units of CBL. Each RBL sells for $10 per unit and each CBL sells for $12 per unit.
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Required:
1. Assuming that no further processing occurs after the split-off point, how much of the joint costs are allocated to commercial lumber (CBL) on a physical measure method basis?
2. If no further processing occurs after the split-off point, how much of the joint cost is allocated to the residential lumber (RBL) using a sales value at split-off method?
3. Assume that the CBL is not marketable at split-off but must be planed and sized at a cost of $324,000 per production run. During this process, 10,800 units are unavoidably lost and have no value. The remaining units of CBL are salable at $14 per unit. The RBL, although…
Northwest Building Products (NBP) manufactures two lumber products from a joint milling process: residential building lumber (RBL)
and commercial building lumber (CBL). A standard production run incurs joint costs of $531,000 and results in 94,400 units of RBL and
141,600 units of CBL. Each RBL sells for $10 per unit and each CBL sells for $12 per unit.
Required:
1. Assuming that no further processing occurs after the split-off point, how much of the joint costs are allocated to commercial lumber
(CBL) on a physical measure method basis?
2. If no further processing occurs after the split-off point, how much of the joint cost is allocated to the residential lumber (RBL) using a
sales value at split-off method?
3. Assume that the CBL is not marketable at split-off but must be planed and sized at a cost of $354,000 per production run. During
this process, 11,800 units are unavoidably lost and have no value. The remaining units of CBL are salable at $14 per unit. The RBL,
although salable…
P
Alvarez Company makes three joint products, products A, B, and C. For each batch, the materials cost is $22,500, direct labor cost is
$6,600, and manufacturing overhead is $13,900. From each batch, the company makes 4,300 pounds of A, 3,200 pounds of B, and
2,500 pounds of C.
Required:
a. What are the total joint costs for each batch of the products?
b. Allocate the joint costs to each of the three products.
c. Determine the cost per pound for product A.
a. Total joint costs
b. Amount of joint costs allocated to A
b. Amount of joint costs allocated to B
b. Amount of joint costs allocated to C
c. Cost for product A
per pound
Chapter 17 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Should actual or budgeted service department costs...Ch. 17 - Prob. 4RQCh. 17 - Why does dual cost allocation improve the...Ch. 17 - What potential behavioral problem can result when...Ch. 17 - Should actual or budgeted service department costs...Ch. 17 - Explain the difference between two-stage...Ch. 17 - Define the following terms: joint production...Ch. 17 - Prob. 10RQ
Ch. 17 - Describe the relative-sales-value method of joint...Ch. 17 - Define the term net realizable value, and explain...Ch. 17 - Are joint cost allocations useful? If they are,...Ch. 17 - For what purpose should the managerial accountant...Ch. 17 - Prob. 15ECh. 17 - Refer to the data given in the preceding exercise....Ch. 17 - Tuscaloosa National Bank has two service...Ch. 17 - Refer to the data given in the preceding exercise....Ch. 17 - Breakfasttime Cereal Company manufactures two...Ch. 17 - Refer to the data given in the preceding exercise....Ch. 17 - Refer to the data given in Exercise 1720....Ch. 17 - Prob. 23ECh. 17 - Prob. 24PCh. 17 - Prob. 25PCh. 17 - Celestial Artistry Company is developing...Ch. 17 - Snake River Sawmill manufactures two lumber...Ch. 17 - Travelcraft Company manufactures a complete line...Ch. 17 - Biondi Industries is a manufacturer of chemicals...Ch. 17 - Berger Company manufactures products Delta, Kappa,...Ch. 17 - Prob. 31PCh. 17 - Lafayette Company manufactures two products out of...Ch. 17 - Refer to the data given in Problem 1726 for...Ch. 17 - Prob. 34PCh. 17 - Top Quality Fruit Company, based on Oahu, grows,...Ch. 17 - Prob. 36C
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