Joint Cost
The Sun-Kissed Company manufactures two skin-care lotions, Soft
Skin and Silken Skin, out of a joint process. The joint (common)
costs incurred are $428,000 for a standard production run that
generates 200,000 gallons of Soft Skin and 120,000 gallons of
Silken Skin. Additional processing costs beyond the split-off point
are $1.40 per gallon for Soft Skin and $0.90 per gallon for Silken
Skin. Soft Skin sells for $2.40 per gallon while Silken Skin sells
for $3.90 per gallon.
The Best Eastern Hotel chain has asked the Sun-Kissed Company to supply it with 240,000 gallons of Silken Skin at a price of $3.65 per gallon. Best Eastern plans to have the Silken Skin bottled in 1.5-ounce personal-use containers that are supplied in each of its hotel rooms as part of the complimentary personal products for guest use.
If Sun-Kissed accepts the order, it will save $0.05 per gallon in packaging of Silken Skin. There is sufficient excess capacity in Sun-Kissed's production system to handle just one more production run in order to have sufficient Silken Skin for this special order. However, the nature of the joint process always results in 200,000 gallons of Soft Skin and 120,000 gallons of Silken Skin. Also, the market for Soft Skin is saturated; hence, any additional sales of Soft Skin would take place at a price of $1.60 per gallon.
a. What is the profit normally earned on one production run of Soft Skin and Silken Skin?
Do not use negative signs with your answers.
Profit from one production run:
Soft skin | Answer |
Silken skin | Answer |
Total contribution margin | Answer |
Join production costs | Answer |
Total profit | Answer |
b. What is the incremental effect on overall income if the Sun-Kissed Company accepts the special order for Silken Skin?
Use a negative signs with your answer only to indicate a decrease in overall income. Otherwise do not use negative signs with your answers.
Additional contribution margin | |
Soft skin | Answer |
Silken skin | Answer |
Total | Answer |
Additional costs/lost profit: | |
Original Silken Skin contribution margin | Answer |
Joint production costs | Answer |
Increase (decrease) in overall income | Answer |
Joint Cost The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, out of...
Joint Cost The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $430,000 for a standard production run that generates 195,000 gallons of Soft Skin and 120,000 gallons of Silken skin. Additional processing costs beyond the split-off point are $1.40 per gallon for Soft Skin and $0.90 per gallon for Silken skin. Soft Skin sells for $2.40 per gallon while Silken Skin sells for $3.9 per gallon....
Joint Cost The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $425,000 for a standard production run that generates 175,000 gallons of Soft Skin and 120,000 gallons of Silken Skin. Additional processing costs beyond the split-off point are $1.40 per gallon for Soft Skin and $0.90 per gallon for Silken Skin. Soft Skin sells for $2.40 per gallon while Silken Skin sells for $3.90 per gallon....
Joint Cost The Sun-Kissed Company manufactures two skin-care lotions, Soft Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $370,000 for a standard production run that generates 150,000 gallons of Soft Skin and 120,000 gallons of Silken Skin. Additional processing costs beyond the split-off point are $1.4 per gallon for Soft Skin and $0.90 per gallon for Silken Skin. Soft Skin sells for $2.40 per gallon while Silken Skin sells for $3.90 per gallon....
The Sun-kissed Company manufactures two skin-care lotions, Soft Skin and Silken skin, out of a joint process. The joint common costs incurred are $430,000 for a standard production run that generates 195,000 gallons of Soft Skin and 120,000 gallons of Silken skin. Additional processing costs beyond the split-off point are $1.40 per gallon for Soft Skin and $0.90 per gallon for Siken Skin Soft Skin sells for $2.40 per gallon while Silken Skin sells for $3.9 per gallon The Best...
Choi Company manufactures two skin care lotions, Smooth skin and Silken Skin, from a joint process. The joint costs incurred are $340,000 for a standard production run that generates 140,000 pints of Smooth Skin and 180,000 pints of Silken Skin. Smooth Skin sells for $3.60 per pint, while Silken Skin sells for $5.30 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off point,...
Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $360,000 for a standard production run that generates 240,000 pints of Smooth Skin and 110,000 pints of Silken Skin. Smooth Skin sells for $3.10 per pint, while Silken Skin sells for $5.10 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off...
Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $390,000 for a standard production run that generates 270,000 pints of Smooth Skin and 290,000 pints of Silken Skin. Smooth Skin sells for $2.30 per pint, while Silken Skin sells for $4.50 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off point,...
Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $410,000 for a standard production run that generates 290,000 pints of Smooth Skin and 130,000 pints of Silken Skin. Smooth Skin sells for $2.50 per pint, while Silken Skin sells for $4.00 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required: 1. Assuming that both products are sold at the split-off...
Special Order, Traditional Analysis Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $91,400 for a standard production run that generates 34,600 gallons of Refined Oil and 17,300 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.60 per gallon for Refined Oil and $2.05 per gallon for Top Quality Oil. Refined Oil sells for $4.45 per gallon, while...
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L. Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split off, but must be processed further. Information on one batch of the three products is as follows: Product Gallons Further Processing Cost per Gallon $0.50 Eventual Market Price per Gallon L-Ten $2.00 Triol 3,700 4,000 2,300 1.00 5.00 Pioze 1.50 6.00 Required: 1....