Joint cost allocation Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $250 per batch. At the split-off point, one batch produces 80, 40, and 25 bottles of hand, body, and foot lotion, respectively. After the split-off point, hand lotion is sold immediately for $2.50 per bottle. Body lotion is processed further at an additional cost of $0.25 per bottle and then sold for $5.75 per bottle. Foot lotion is processed further at an additional cost of $0.85 per bottle and then sold for $4.00 per bottle. Assume that body and foot lotion could be sold at the split-off point for $3.00 and $3.20 per bottle, respectively. Using the market value at split-off method, allocate the joint costs of production to each product. Round your answers to two decimal places. Joint Product Bottles per Batch Market Value per Bottle at Split-Off Total Market Value at Split-Off Percent of Total MV at Split-Off Joint Costs Allocation Hand lotion   $ $ % $ $ Body lotion       %     Foot lotion       %     Totals     $     $ A lotion manufacturing company produces three types of lotions. After the split-off point the company continues to sell the body lotion and makes $0.25 profit per bottle. The foot lotion generates $0.05 loss per bottle if it continues after the split-off point. Which lotion should be continued after the split-off point? Hand lotion Body lotion Foot lotion Body and Foot lotion Joint Product Bottles per Batch Market Value per Bottle at Split-Off Total Market Value at Split-Off Market Price per Bottle Added Cost per Bottle NRV per Bottle Total Net Realizable Value   Greater of Total NRV and Total Market Value at Split-Off Proportion Joint Costs Allocation Hand lotion   $ $ $ $ $ $ $ % $ $ Body lotion                 %     Foot lotion                 %     Totals     $         $     $ Allocate the joint costs of production to each product using the net realizable value method. Round your answers to two decimal places.

FINANCIAL ACCOUNTING
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Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Joint cost allocation

Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $250 per batch. At the split-off point, one batch produces 80, 40, and 25 bottles of hand, body, and foot lotion, respectively. After the split-off point, hand lotion is sold immediately for $2.50 per bottle. Body lotion is processed further at an additional cost of $0.25 per bottle and then sold for $5.75 per bottle. Foot lotion is processed further at an additional cost of $0.85 per bottle and then sold for $4.00 per bottle. Assume that body and foot lotion could be sold at the split-off point for $3.00 and $3.20 per bottle, respectively.

  1. Using the market value at split-off method, allocate the joint costs of production to each product. Round your answers to two decimal places.

Joint Product

Bottles
per Batch

Market Value
per Bottle at
Split-Off

Total Market
Value at
Split-Off

Percent of
Total MV at
Split-Off

Joint Costs

Allocation

Hand lotion

 

$

$

%

$

$

Body lotion

 

 

 

%

   

Foot lotion

 

   

%

   

Totals

   

$

   

$

  1. A lotion manufacturing company produces three types of lotions. After the split-off point the company continues to sell the body lotion and makes $0.25 profit per bottle. The foot lotion generates $0.05 loss per bottle if it continues after the split-off point. Which lotion should be continued after the split-off point?
  2. Hand lotion
  3. Body lotion
  4. Foot lotion
  5. Body and Foot lotion

Joint Product

Bottles
per Batch

Market Value
per Bottle at
Split-Off

Total Market
Value at
Split-Off

Market Price
per Bottle

Added Cost
per Bottle

NRV
per Bottle

Total Net
Realizable
Value

 

Greater of
Total NRV
and Total
Market Value
at Split-Off

Proportion

Joint
Costs

Allocation

Hand lotion

 

$

$

$

$

$

$

$

%

$

$

Body lotion

               

%

   

Foot lotion

               

%

   

Totals

   

$

       

$

   

$

  1. Allocate the joint costs of production to each product using the net realizable value method. Round your answers to two decimal places.
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