Managers must decide whether a product should be sold at splitoff or processed further. The sales...
Managers must decide whether a product should be sold at splitoff or processed further. The sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.” Do you agree? Explain.
Homework Answers
NO, Any method used to allocate joint costs to individual products that is applicable to the problem of joint product- cost allocation should not be used for management decision regarding whether a product should be sold or processed further. When a product is an inherent result of joint process,the decision to process further should not be influenced by either the size of the total joint costs or by the portion of joint costs assigned to particular products.
Joint costs are irrelevant for these decisions . The only relevant items for these decisions are the incremental revenue and the incremental costs beyond the splitoff point.
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Managers must decide whether a product should be
sold at splitoff or processed further. The sales...
managers must decide whether a product should be sold at splitoff or processed further. the sales...
managers must decide whether a product should be sold at splitoff or processed further. the sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.” do you agree? explain.
Striker Chemical Lab manufactures liquids into three different outputs: Freisa, Bracko, and Pragin. Freisa accounts for...
Striker Chemical Lab manufactures liquids into three different outputs: Freisa, Bracko, and Pragin. Freisa accounts for 56 percent of the net realizable value at the split-off point, Bracko accounts for 29 percent, and Pragin accounts for the balance. The joint costs total $644,000. If Pragin is accounted for as a by-product, its $74,000 net realizable value at split-off is credited to the joint manufacturing costs by crediting the by-product’s net realizable value as a reduction in the joint costs. How...
Options for 1-6: (1): process further / sell as is (2): decreases / increases (3): process further / sell as...
Options for 1-6:
(1): process further / sell as is
(2): decreases / increases (3): process
further / sell as is (4): be higher if they
do / be lower if they do (5): different / the same
(6): is / is not
3. Interlock Soy Products (USP) buys soybeans and processes them into other soy products. Each ton of soybeans that USP purchases for $320 can be converted for an additional $200 into 675 lbs of soy meal and 120 gallons of soy oil....
Illinois Soy Products (ISP) buys soybeans and processes them into other soy products. Each ton of...
Illinois Soy Products (ISP) buys soybeans and processes them into other soy products. Each ton of soybeans that ISP purchases for $340can be converted for an additional $180into 675 poundsof soy meal and 140 gallonsof soy oil. A pound of soy meal can be sold at split off for $1.28 and can be sold in bulk for $4.75per gallon. ISP can process the 675 pounds of soy meal into 825 pounds of soy cookiesat an additional cost of $340.Each pound...
SK company purchases crude vegetable oil. Refining this oil results in three products at splitoff point:...
SK company purchases crude vegetable oil. Refining this oil results in three products at splitoff point: C, D and E. Product C and D are intermediate products and can individually be further refined into C1 and D1. Product E is a by-product formed after further processed at an additional cost of $2,000 processing cost after the splitoff point. In addition, 30% of revenue is marketing cost on selling of product E. The joint costs of processing the crude vegetable oil...
b. Now allocate the joint cost to the cookies and the Soyola using the NRV method....
b. Now allocate the joint cost to the cookies and the Soyola using the NRV method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Cookies Soyola Total Final sales value of total production Deduct separable costs Net realizable value Weighting Joint costs allocated Requirement 2. Should ISP have processed each of the products further? What effect does the allocation method have on this decision? Begin by calculating the profit or loss that would occur...
Problem 2: The Green Company processes unprocessed goat milk up to the splitoff point where three products, condensed goat milk, skim goat milk, and cream result. The following information was collec...
Problem 2: The Green Company processes unprocessed goat milk up to the splitoff point where three products, condensed goat milk, skim goat milk, and cream result. The following information was collected for the month of October: Direct Materials processed: Production: 240,000 gallons (after shrinkage) 92,500 gallons 105,500 gallons 42,000 gallons $12.50 per gallon $4.50 per gallon $20 per gallon Condensed goat milk Skim goat milk Cream Sales Condensed goat milk Skim goat milk Cream The costs of purchasing the of...
4. How do we decide whether a product ought to be sold at the split-off point...
4. How do we decide whether a product ought to be sold at the split-off point or processed further?
Saskatchewan Soy Products (SSP) buys soy beans and processes them into other soy products. Each tonne...
Saskatchewan Soy Products (SSP) buys soy beans and processes them into other soy products. Each tonne of soy beans that SSP purchases for $380 can be converted for an additional $190 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.12, and soy oil can be sold in bulk for $4 per gallon. SSP can process the 700 lbs of soy meal into 750 lbs of...
Holmes Company produces a product that can be either sold as is or processed further. Holmes...
Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $52,000 to produce 1,700 units that can be sold now for $97,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $255 per unit. If Holmes processes further, the units can be sold for $495 each. Compute the incremental income if Holmes processes further. Sell as is Process Further Incremental Amount Sales Additional processing costs...
Options for 1-6:
(1): process further / sell as is
(2): decreases / increases (3): process
further / sell as is (4): be higher if they
do / be lower if they do (5): different / the same
(6): is / is not
3. Interlock Soy Products (USP) buys soybeans and processes them into other soy products. Each ton of soybeans that USP purchases for $320 can be converted for an additional $200 into 675 lbs of soy meal and 120 gallons of soy oil....
SK company purchases crude vegetable oil. Refining this oil results in three products at splitoff point: C, D and E. Product C and D are intermediate products and can individually be further refined into C1 and D1. Product E is a by-product formed after further processed at an additional cost of $2,000 processing cost after the splitoff point. In addition, 30% of revenue is marketing cost on selling of product E. The joint costs of processing the crude vegetable oil...
b. Now allocate the joint cost to the cookies and the Soyola using the NRV method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Cookies Soyola Total Final sales value of total production Deduct separable costs Net realizable value Weighting Joint costs allocated Requirement 2. Should ISP have processed each of the products further? What effect does the allocation method have on this decision? Begin by calculating the profit or loss that would occur...
Problem 2: The Green Company processes unprocessed goat milk up to the splitoff point where three products, condensed goat milk, skim goat milk, and cream result. The following information was collected for the month of October: Direct Materials processed: Production: 240,000 gallons (after shrinkage) 92,500 gallons 105,500 gallons 42,000 gallons $12.50 per gallon $4.50 per gallon $20 per gallon Condensed goat milk Skim goat milk Cream Sales Condensed goat milk Skim goat milk Cream The costs of purchasing the of...
4. How do we decide whether a product ought to be sold at the split-off point or processed further?
Saskatchewan Soy Products (SSP) buys soy beans and processes them into other soy products. Each tonne of soy beans that SSP purchases for $380 can be converted for an additional $190 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.12, and soy oil can be sold in bulk for $4 per gallon. SSP can process the 700 lbs of soy meal into 750 lbs of...
Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $52,000 to produce 1,700 units that can be sold now for $97,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $255 per unit. If Holmes processes further, the units can be sold for $495 each. Compute the incremental income if Holmes processes further. Sell as is Process Further Incremental Amount Sales Additional processing costs...
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