Jill makes two products out of a joint process—products Beta & Gamma. The joint (common) costs...
Jill makes two products out of a joint process—products Beta & Gamma. The joint (common) costs incurred are $800,000 for a standard production run that generates 70,000 pounds of Gamma and 30,000 pounds of Beta. Gamma sells for $9.00 per pound whereas Beta sells for $7.00 per pound.
7) If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of each production run allocated to Beta on a sales value at splitoff basis is:
8) Assume the same joint costs and final selling price of Beta and Gamma as before. But now assume that there additional processing costs beyond the splitoff point for each. They are $1.00 per pound for Gamma and $2.20 per pound for Beta. What amount of joint costs of each production run would be allocated to Beta on an estimated net-realizable value basis? (round off answer to the nearest dollar)
9) Tom makes products Alpha and Delta from a joint process. Alpha has been allocated $7,500 of total joint costs of $30,000 for the 1,500 units produced. Alpha can be sold at the splitoff point for $4 per unit, or it can be processed further with additional costs of $2,000 and sold for $7 per unit. If Alpha is processed further and sold, instead of being sold at the split-off point, how would operating income be affected? In other words, which yields a higher operating income—selling at split-off or processing further? By how much?
Homework Answers
7. total sale value of gamma and beta
=>(70,000 pounds *$9) + (30,000 pounds*$7)
=>630,000+210,000
=>$840,000..
Joint cost allocated to gamma on basis of sale value = $800,000*(630,000/840,000)
=>$600,000.
Joint cost allocated to beta on basis of sale value = $800,000*(210,000/840,000)
=>$200,000.
8.net realisable value of gamma = 70,000 pounds * ($9-$1)
=>$560,000.
net realisable value of beta = 30,000 pounds *($7-2.20)
=>$144,000.
total of net realisable value = $704,000
allocation of joint cost to gamma = $800,000*(560,000/704,000)
=>$636,364.
allocation of joint cost to beta = $800,000*(144,000/704,000)
=>$163,636.
9.net income comparision:
| sale at split off | process further | |
| sales (1500 units*$4) (1500*$7) | 6,000 | 10,500 |
| less:joint cost | (7500) | (7500) |
| less: additional processing cost | nil | (2000) |
| net income | (1500) | 1000 |
Processing further yields higher net income.
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in a joint processing operation. Joint processing costs up to the
split-off point total $350,000 per quarter. For financial reporting
purposes, the company allocates these costs to the joint products
on the basis of their relative sales value at the split-off point.
Unit selling prices and total output at the split-off point are as
follows:
Product
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $390,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product A B C Selling Price $ 28.00 per pound $ 22.00 per pound $ 34.00...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input in a
joint processing operation. Joint processing costs up to the
split-off point total $330,000 per quarter. For financial reporting
purposes, the company allocates these costs to the joint products
on the basis of their relative sales value at the split-off point.
Unit selling peices and total output at the split-off point are as
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split-off point total $350,000 per quarter. For financial reporting
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on the basis of their relative sales value at the split-off point.
Unit selling prices and total output at the split-off point are as
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A
$
16
per pound
15,000
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$
8
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $390,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product A B C Selling Price $ 28.00 per pound $ 22.00 per pound $ 34.00...
Dorsey Company manufactures three products from a common input in a
joint processing operation. Joint processing costs up to the
split-off point total $330,000 per quarter. For financial reporting
purposes, the company allocates these costs to the joint products
on the basis of their relative sales value at the split-off point.
Unit selling peices and total output at the split-off point are as
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