Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 5, Problem 3TIF
To determine
Write a memo to the CFO of Company TCL agreeing or disagreeing to the argument of Production Manager of Product M.
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Joint Products Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 5,000 gallons of productA and 1,000 gallons of product B to the split-off point costs $5,600. The sales value at split-off is $2per gallon for product A and $30 per gallon for product B. Product B requires additional separableprocessing beyond the split-off point at a cost of $2.50 per gallon before it can be sold at a price of$34 per gallon.Required What is the company’s cost to produce 1,000 gallons of product B?
Joint Product
Standard door handle
Joint Cost Allocation-Market Value at Split-off Method
Man O'Fort Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing $27,000 per
batch and producing 1,800 standard door handles and 900 curved door handles at the split-off point. Both door handles undergo additional production processes after the
split-off point, but could be sold at that point: the standard style for $8 per door handle and the curved style for $4 per door handle.
Determine the amount of joint production costs allocated to each style of door handle using the market value at split-off method.
Curved door handle
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Milo Manufacturing produces products Kappa and Lambda from a joint process. Total joint costs are $158,000. The sales value at split-off was $167,760 for 4,400 units of Kappa and $63,280 for 6,600 units of Lambda.
Required:
What joint costs are allocated to the two products using the net realizable value at split-off approach?
Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.
What joint costs are allocated to the two products using the physical quantities method?
Note: Do not round intermediate calculations.
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...
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- Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring 250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: An assistant in the companys cost accounting department was overheard saying ...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort. Which of the following strategies should be recommended for Oakes?arrow_forwardJoint cost allocation net realizable value method Natures 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 logsproduces 20,304 cubic yards of wood chips, 14,100 cubic yards of mulch, and 9,024 cubic yards ofwood pulp. The joint production process costs a total of 32,000 per batch. After the split-off point,wood chips are immediately sold for 25 per cubic yard while wood pulp and mulch are processedfurther. The market value of the wood pulp and mulch at the split-off point is estimated to be 22and 24 per cubic yard, respectively. The additional production process of the wood pulp costs 5per cubic yard, after which it is sold for 30 per cubic yard. The additional production process ofthe mulch costs 4 per cubic yard, after which it is sold for 32 per cubic yard. Allocate the jointcosts of production to each product using the net realizable value method.arrow_forwardMilo Manufacturing produces products Kappa and Lambda from a joint process. Total joint costs are $168,000. The sales value at split-off was $174,960 for 8,400 units of Kappa and $63,280 for 12,600 units of Lambda. Required: What joint costs are allocated to the two products using the net realizable value at split-off approach? Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. What joint costs are allocated to the two products using the physical quantities method? Note: Do not round intermediate calculations. Kappa Lambda a. Net realizable value method ??? ??? b. Physical quantities method ??? ???arrow_forward
- Joint Cost Allocation—Physical Units Method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of $710 per batch. Using the physical units method, allocate the joint production cost to each product. Round your answers to two decimal places.arrow_forwardJoint Cost Allocation—Physical Units Method Woodfall, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 100 washed boards, 60 stained boards, and 40 pressure treated boards. The joint production process costs a total of $3,500 per batch. Using the physical units method, allocate the joint production cost to each product. Joint Product Allocation Washed $fill in the blank 1 Stained fill in the blank 2 Pressure treated fill in the blank 3 Totals $fill in the blank 4arrow_forwardJoint Products; By-Products (Appendix) The Marshall Company has a joint production process that produces two joint products and a by-product. The joint products are Ying and Yang, andthe by-product is Bit. Marshall accounts for the costs of its products using the net realizable valuemethod. The two joint products are processed beyond the split-off point, incurring separable processing costs. There is a $1,000 disposal cost for the by-product. A summary of a recent month’s activityat Marshall is shown below:Ying Yang BitUnits sold 50,000 40,000 10,000Units produced 50,000 40,000 10,000Separable processing costs—variable $140,000 $42,000 $—Separable processing costs—fixed $10,000 $8,000 $—Sales price $6.00 $12.50 $1.60Total joint costs for Marshall in the recent month are $265,000, of which $115,000 is a variable cost.Required1. Calculate the manufacturing cost per unit for each of the three products.2. Calculate the total gross margin for each productarrow_forward
- DEF Company produces three product (A, B, and C) in a joint process costing 100,000. The products can be sold as they leave the process or they can be processed further and sold. The cost accountant has provided the following information: Product Unit Volume Sales prices at split-off Separable further processing costs sales price after further processing A 3000 10 60000 25 B 4000 15 50000 30 C 8000 20 90000 35 Assume that all processing costs are variable costs. Which products should DEF Company sell at split-off, and which products should be processed further?arrow_forwardIdaho Corporation manufactures liquid chemicals A and B from a joint process. Joint costs are allocated on the basis of relative market value at split-off. It costs 4,560 to process 500 gallons of Product A and 1,000 gallons of Product B to the split-off point. The market value at split-off is 10 per gallon for Product A and 14 for Product B. Product B requires an additional process beyond split-off at a cost of 2 per gallon before it can be sold. What is Idaho's cost to produce 1,000 gallons of Product B? A. 5,040 B. 4,360 C. 4,860 D. 5,360 E. 3,360arrow_forwardJoint Cost Allocation-Market Value at Split-off Method Gripturn Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing $28,000 per batch and producing 2,000 standard door handles and 1,000 curved door handles at the split-off point. Both door handles undergo additional production processes after the split-off point, but could be sold at that point: the standard style for $10 per door handle and the curved style for $5 per door handle. Determine the amount of joint production costs allocated to each style of door handle using the market value at split-off method. Joint Product Standard door handle Curved door handle Totals Feedback Allocationarrow_forward
- Marin Products produces three products - DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows. Units Sold Price (after addt'l processing) Separable Processing cost Units Produced Total Joint Cost Sales Price at Split-off $ DBB-1 11,000 50 $282,000 11,000 $ $ DBB-2 17,000 20 $ 45 $ DBB-3 24,000 70 30 $ $114,000 $169,000 $ 565,000 17,000 24,000 52,000 $3,200,000 Total 50 52,000 The amount of joint costs allocated to product DBB-1 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):arrow_forwardArkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 4,300 gallons of product A and 1,400 gallons of product B to the split-off point costs $5,200. The sales value at split-off is $3.00 per gallon for product A and $21.50 per gallon for product B. Product B requires additional separable processing beyond the split-off point at a cost of $2.80 per gallon before it can be sold at a price of $34 per gallon. Required: What is the company’s cost to produce 1,400 gallons of product B? Question 2. Webster Company produces 30,000 units of product A, 25,000 units of product B, and 16,500 units of product C from the same manufacturing process at a cost of $405,000. A and B are joint products, and C is regarded as a by-product. The unit selling prices of the products are $25 for A, $10 for B, and $2 for C. None of the products requires separable processing. Of the units produced, Webster…arrow_forwardAlternative joint-cost-allocation methods, further process decision. The Tempura spirits Company produces two products – methanol (wood alcohol) and turpentine—by a joint process. Joint costs amount to $ 124,000 per batch of output. Each batch totals 9,500 gallons:25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol,$4 per gallon, and turpentine,$2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon.arrow_forward
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