Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 19, Problem 4PB
Joint cost allocation
Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is m ice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process.
Instructions
- 1. Using the physical units method, allocate the joint costs of production to each product.
- 2. Using the weighted average method, allocate the joint costs of production to each product.
- 3. Is the cost of the type of fertilizer required by each type of rose a good weight factor?
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Joint cost allocation
Florissa's Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same amount of water; daisies require three times as much as lilies, and the water required for tulips is about halfway between the amounts needed for daisies and lilies. Although the lilies and tulips receive more water than they need due to the joint irrigation process, they are not hurt by the overwatering. The joint production cost of the three varieties of flowers is about $30 per harvest. Every harvest yields 10 tulips, 20 lilies, and 20 daisies.
Allocate the joint costs of production to each product using the physical units method.
Joint Product
Flowersper Harvest
Proportion
Joint Costs
Allocation
Tulip
%
$
$
Lily
%
Daisy
%
Totals
$
Which products receive the largest portion of the joint costs?
received…
Joint Cost Allocation-Net Realizable Value Method
Lily's Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of
$30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade, and 21 cups of raspberry lemonade. After the split-off point, all three
lemonades can be sold for $0.80 per cup, but strawberry and raspberry lemonade can be processed further by adding artificial coloring and flavoring and sold for $0.95
and $1.00 per cup, respectively. It is estimated that these additional processing costs are $0.75 and $1.80 per batch for strawberry and raspberry lemonade, respectively.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product
Pure lemonade
Strawberry lemonade
Raspberry lemonade
Totals
Allocation
Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is twice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process.
1. Using the physical units method, allocate the joint costs of production to each product. Round your answers to two decimal places.
JointProduct
Rosesper Harvest
Proportion
JointCosts
Allocation
Red roses
fill in the blank 1
fill in the blank 2%
$fill in the blank 3
$fill in the blank 4
White roses
fill in the blank 5
fill in the blank 6%
fill in the blank 7
fill in the blank 8
Peach roses
fill in the blank 9
fill in the blank 10%
fill in the blank 11…
Chapter 19 Solutions
Financial And Managerial Accounting
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- Joint cost allocation Florissas Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same amountof water; daisies require three times as much as lilies, and the water required for tulips is abouthalfway between the amounts needed for daisies and lilies. Although the lilies and tulips receivemore water than they need due to the joint irrigation process, they are not hurt by the overwa-tering. The joint production cost of the three varieties of flowers is about 30 per harvest. Everyharvest yields 10 tulips, 20 lilies, and 20 daisies. Instructions 1. Allocate the joint costs of production to each product using the physical units method. Whichproducts receive the largest portion of the joint costs? 2. Allocate the joint costs of production to each product using the weighted average method. Nowwhich product receives the largest portion of the joint costs? 3. Why would it be important to consider whether the amount of watering is an appropriate weight factor?arrow_forwardRosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregate cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is twice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process. 1. Using the physical units method, allocate the joint costs of production to each product. 2. Using the weighted average method, allocate the joint costs of production to each product. 3. Is the cost of the type of fertilizer required by each type of rose a good weight factor?arrow_forwardJoint cost allocation net realizable value method Lilys Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of 30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade, and 21 cups of raspberrylemonade. After the split-off point, all three lemonades can be sold for 50.80 per cup, but strawberry and raspberry lemonade can be processed further by adding artificial coloring and flavoringand sold for 0.95 and 1.00 per cup, respectively. It is estimated that these additional processingcosts are 0.75 and 1.80 per batch for strawberry and raspberry lemonade, respectively. Allocatethe joint costs of production to each product using the net realizable value method.arrow_forward
- 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 batchproduces 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 atan additional cost of 0.85 per bottle and then sold for 4.00 per bottle. Assume that body and footlotion could be sold at the split-off point for 3.00 and 3.20 per bottle, respectively. Instructions 1. Using the market value at split-off method, allocate the joint costs of production to each product. 2. Based on the information provided and your answer to part (1), should Lovely LotionInc. continue processing body and foot lotion after the split-off point? 3. Allocate the joint costs of production to each product using the net realizable value method.arrow_forwardAllocate the joint costs to Seduction and Romance under the constant gross-margin percentage NRV method.arrow_forwardJoint Cost Allocation-Net Realizable Value Method Nature's Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,400 cubic yards of wood chips, 10,400 cubic yards of mulch, and 9,200 cubic yards of wood pulp. The joint production process costs a total of $34,000 per batch. After the split-off point, wood chips are immediately sold for $25 per cubic yard while wood pulp and mulch are processed further. The market value of the wood pulp and mulch at the split-off point is estimated to be $22 and $25 per cubic yard, respectively. The additional production process of the wood pulp costs $5 per cubic yard, after which it is sold for $30 per cubic yard. The additional production process of the mulch costs $4 per cubic yard, after which it is sold for $27 per cubic yard. Allocate the joint costs of production to each product using the net realizable value…arrow_forward
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- Joint cost allocation — weighted average method Gary’s Grooves Co. produces two types of carving knives, one with a handle made of a polymer that looks like walnut wood and another with a handle made with a polymer that looks like red oak. The knives are made through a joint production molding process that produces 380 knife blades for red oak handle knives and 240 knife blades for walnut handle knives at the split-off point. The polymer for the red oak handle knife blades requires twice as much cooling time as the polymer for the walnut handle knife blades, although all knives are removed from the joint molding process at the same time (i.e., once the cooling for the red oak handle knives is complete). The joint production process costs a total of $ 6,000 . This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Assuming the company allocates…arrow_forwardJoint Cost Allocation—Physical Units Method 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.arrow_forwardAllocating Joint Costs Using the Net Realizable Value Method Please answer in same format as question.arrow_forward
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