Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 19, Problem 15E
Big Al’s Inc. produces and sells various cuts of steak, including sirloin, ribeye, and T-bone. The cuts of steak are produced jointly until Big Al’s cattle are butchered. Big Al estimates that, at the split-off point, 10 cows yield 99 pounds of sirloin cuts, 55 pounds of ribeye cuts, and 66 pounds of T-bone cuts. Given Big Al’s estimate that the joint cost of producing 10 cows’ worth of steak cuts is $1,500, use the physical units method to allocate the joint costs of production to each product.
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lowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans can be
converted into 500 pounds of soy meal and 100 gallons of soy oil. This process incurs joint costs of $ 540. At splitoff
point; soy meal can be sold for $4 per pound, and soy ol can be sold for $5 per gallon.
ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $1500. Each
pound of soy cookles can be sold for $6 per pound.
The 100 gallons of soy oil can be packaged at an additional cost of $300 and made into 400 liters of Soyola. Each liter
of Soyola can be sold for $3.
(For each item below write your answers inside the boxes.)
a) What is the total sales value (from both products) at splitoff point? Ans. = $
b) Using sales value at splitoff method, what amount of the joint costs ($ 540) would be allocated to soy meal Ans, = $
C) Using net realizable value method, what amount of the joint costs ($ 540) would be allocated to Soyola?…
Nervana Soy Products (NSP) buys soybeans and processes them into other soy products. Each ton of soybeans that NSP purchases for $350 can be converted for an additional $210 into 650 lbs of soy meal and
100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.32 and soy oil can be sold in bulk for $4.5 per gallon.
NSP can process the 650 pounds of soy meal into 750 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.32 per pound. The 100 gallons of soy oil can be
packaged at a cost of $230 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.15.
Read the requirements.
Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method.
a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.)
Sales value of total production at splitoff…
New Brunswick Soy Products (NBSP) buys soy beans and processes them into other soy products. Each tonne of soy
beans that NBSP purchases for $340 can be converted for an
additional $180 into 550lbs of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.36,
and soy oil can be sold in bulk for $4.75 per gallon.
NBSP can process the 550lbs of soy meal into 700lbs of soy cookies at an additional cost of $310. Each pound of soy
cookies can be sold for $2.36 per pound. The 100 gallons of
soy oil can be packaged at a cost of $270 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $
1.15.
Required
Allocate the joint cost to the cookies and the Soyola using:
a. Sales value at splitoff method
b. NRV method
Should the company have processed each of the products further? What effect does the allocation method have on this
decision?
Chapter 19 Solutions
Financial And Managerial Accounting
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