Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 17E
Joint cost allocation-market value at split-off method
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of 112,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
Using the market value at split-off method, allocate the $12,000 joint cost of production to each product.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Joint Cost Allocation—Market Value at Split-off Method
Burn-on Inc. processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $15,800. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
Product
Unit Price
Gasoline
$2 per gallon
Diesel
1 per gallon
Kerosene
3 per gallon
Using the market value at split-off method, allocate the $15,800 joint cost of production to each product.
Joint Product
Allocation
Gasoline
$fill in the blank 1
Diesel
fill in the blank 2
Kerosene
fill in the blank 3
Totals
$fill in the blank 4
Joint Cost Allocation—Market Value at Split-off Method
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $12,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
Gasoline
$2 per gallon
Diesel
1 per gallon
Kerosene
3 per gallon
Using the market value at split-off method, allocate the $12,000 joint cost of production to each product.
Joint Product
Allocation
Gasoline
$
Diesel
Kerosene
Totals
$
Joint Cost Allocation—Market Value at Split-off Method
Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar are processed further. The market value of the granulated sugar and caster sugar is estimated to both be $0.25 at the split-off point. One batch of joint production costs $1,640 and yields 3,000 pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at the split-off point.
Allocate the joint costs of production to each product using the market value at split-off method.
Joint Product
Allocation
Raw sugar
$fill in the blank 1
Granulated sugar
fill in the blank 2
Caster sugar
fill in the blank 3
Totals
$fill in the blank 4
Chapter 5 Solutions
Managerial Accounting
Ch. 5 - Why are support department costs difficult to...Ch. 5 - Why does support department cost allocation matter...Ch. 5 - What are some drawbacks of applying support...Ch. 5 - Why is the diect method of support department cost...Ch. 5 - How does management determine the order in which...Ch. 5 - Are large or small companies more likely to use...Ch. 5 - What is the main difference between the physical...Ch. 5 - When would management most likely use the net...Ch. 5 - What are the two most often used ways of...Ch. 5 - How can support department and joint cost...
Ch. 5 - Charlies Wood Works produces wood products (e.g.,...Ch. 5 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 5 - Prob. 3BECh. 5 - Blakes Blacksmith Co. produces two types of...Ch. 5 - Garys Grooves Co. produces two types of carving...Ch. 5 - Prob. 6BECh. 5 - Yo-Down Inc. produces yogurt. Information related...Ch. 5 - Prob. 2ECh. 5 - Blue Africa Inc. produces laptops and desktop...Ch. 5 - Christmas Timber, Inc., produces Christmas trees....Ch. 5 - Crystal Scarves Co. produces winter scarves. The...Ch. 5 - Davis Snowflake Co. produces Christmas stockings...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Support department cost allocation comparison...Ch. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Joint cost allocation market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Joint cost allocation-market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Support department cost allocation Blue Mountain...Ch. 5 - Support activity cost allocation Jakes Gems mines...Ch. 5 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 5 - Joint cost allocation Florissas Flowers jointly...Ch. 5 - Support department cost allocation Hooligan...Ch. 5 - Support activity cost allocation Kizzles Crepes...Ch. 5 - Joint cost allocation McKenzies Soap Sensations,...Ch. 5 - Prob. 4PBCh. 5 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 5 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 5 - Prob. 3MADCh. 5 - Prob. 4MADCh. 5 - Joint cost allocation and performance evaluation...Ch. 5 - Prob. 3TIFCh. 5 - Prob. 1CMACh. 5 - Adam Corporation manufactures computer tables and...Ch. 5 - Breegle Company produces three products (B-40,...Ch. 5 - Tucariz Company processes Duo into two joint...
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
- Joint cost allocation market value at split-off method Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for 0.20 per pound, while granulated and castersugar are processed further. The market value of the granulated sugar and caster sugar is estimatedto both be 0.25 at the split-off point. One batch of joint production costs 1,640 and yields 3,000pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at thesplit-off point. Allocate the joint costs of production to each product using the market value atsplit-off method.arrow_forwardVenezuela Oil Inc. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $1,000,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $10,000,000. Additional information includes: Required: Determine the allocation of joint costs using the net realizable value method, rounding the sales value percentages to the nearest tenth of a percent. (Hint: Reduce the amount of the joint costs to be allocated by the amount of the by-product revenue.)arrow_forwardComputing joint costssales value at split-off and net realizable value methods D.L. Manufacturing Inc.s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is 20,000. The unit sales values of the three products at the split-off point are Product A20, Product B200, and Product C160. Ending inventories include 100 units of Product A, 200 units of Product B, and 300 units of Product C. a. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their sales value at split off. b. Assume that Product C can be sold for 200 a unit if it is processed after split-off at a cost of 25 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their net realizable values.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_forwardBreegle Company produces three products (B-40, J-60, and H-102) from a single process. Breegle uses the physical volume method to allocate joint costs of 22,500 per batch to theproducts. Based on the following information, which product(s) should Breegle continue toprocess after the split-off point in order to maximize profit? a. B-40 only b. J-60 only c. H-102 only d. B-40 and H-102 onlyarrow_forwardSell at Split-Off or Process Further Eunice Company produces two products from a joint process. Joint costs are 70,000 for one batch, which yields 1,000 liters of germain and 4,000 liters of hastain. Germain can be sold at the split-off point for 24 or be processed further, into geraiten, at a manufacturing cost of 4,100 (for the 1,000 liters) and sold for 33 per liter. If geraiten is sold, additional distribution costs of 0.80 per liter and sales commissions of 10% of sales will be incurred. In addition, Eunices legal department is concerned about potential liability issues with geraitenissues that do not arise with germain. Required: 1. CONCEPTUAL CONNECTION Considering only gross profit, should germain be sold at the split-off point or processed further? 2. CONCEPTUAL CONNECTION Taking a value-chain approach (by considering distribution, marketing, and after-the-sale costs), determine whether or not germain should be processed into geraiten.arrow_forward
- How much is the net income attributable to Product M, assuming that joint costs are allocated using the Approximate Net Realizable Value x, and after being processed further, 1,800 gallons of Product M was sold during the year? TVA Company produces three products from the same process and incurs joint processing costs of P150,000. Sales price per gallon at split-off Disposal cost per gallon at split-off P 62.50 Final sales price per gallon P350.00 Gallons Further processing costs P 50.00 2,400 1,100 M P225.50 N 300 150.00 100.00 500.00 500 500 400.00 100.00 750.00 Disposal costs for the products if they are processed further are: M, P 150.00; N, P 275.00; Q, P 50.00.arrow_forwardHow much is the net income attributable to Product M, assuming that joint costs are allocated using the Approximate Net Realizable Value x, and after being processed further, 1,800 gallons of Product M was sold during the year?arrow_forwardY Company produces two joint products: Sweet and Sour. Joint cost is allocated using the net realizable value method at split-off point. Joint production cost is $70,000. Neither product is salable at split-off point. During May, the additional costs incurred beyond split-off point are as follows: Sweet $ 32,000 Sour $ 48,000 Production: Sweet: 3,200 units Sour: 1,600 units Selling prices: Sweet: $50.00 per unit Sour: $ 90.00 per unit What is the amount of joint cost allocated to Sweet and Sour using the NRV Method at split-off point. (Must show calculations or no credit) Joint cost allocated to Sweet: $_____________________________ Joint cost allocated to Sour:…arrow_forward
- Dengerarrow_forwardJOINT PRODUCTS: Machintosh Company produces two products from a common input. Common Input Question 1 The sales value of Product A at the split-off point (without further processing) is P 60,000. The sales value of Product B at the split-off point (without further processing) is P 120,000. Product A Product B *Note: Split-off point is the juncture in the process when the products become separately identifiable. If Product A will be processed further after the split-off point, it will incur a processing cost of P 22,197, but its sales value after further processing will now be P 96,829. What will be the profit for Product A after further processing?arrow_forwardats Assume a company has three products-A, B, and C-that emerge from a joint process. The joint processing costs that are incurred up to the split-off point equal $1,200,000. The selling prices and outputs for each product at the split-off point are as follows: Product A B С Selling Price $33 per pound $29 per pound $24 per pound Product A B C Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Output 14,000 pounds 18,000 pounds 19,000 pounds Additional Processing Costs $65,000 $72,000 $88,000 Selling Price $37 per pound $34 per pound $30 per pound The company is trying to decide whether to retain or discontinue the entire joint manufacturing process. What is the financial advantage (disadvantage) of continuing to operate the entire joint manufacturing process?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,
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher: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,
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Incremental Analysis - Sell or Process Further; Author: Melissa Shirah;https://www.youtube.com/watch?v=7D6QnBt5KPk;License: Standard Youtube License