4. How do we decide whether a product ought to be sold at the split-off point or processed further?
Homework Answers
If the incremental cost of further processing is more than the incremental revenue, then we should sell the product at split-off point as further processing will lead to decrease in income
If the incremental cost of further processing is less than the incremental revenue, then we should sell the product after further processing, as further processing will lead to increase in income
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4. How do we decide whether a product ought to be sold at the split-off point...
1. Why might it be a mistake to allocate fixed costs to different products or segments?...
1. Why might it be a mistake to allocate fixed costs to different products or segments? 2. If there are limits on the amount of a resource that we can use, how do we best decide how to use that resource? 3. Should we allocate joint costs among joint products? 4. How do we decide whether a product ought to be sold at the split-off point or processed further?
XYZ Company makes two products, W and P, in a joint process. At the split-off point,...
XYZ Company makes two products, W and P, in a joint process. At the split-off point, 60,000 units of Product W and 50,000 units of Product P are available each month. Monthly joint production costs total $120,000 and are allocated to the two products equally. Product W can either be sold at the split-off point for $5.60 per unit or it can be processed further and then sold for $8.80 per unit. If Product W is processed further, addi tional...
Sunland Bunyon Lumber Co. produces several products that can be sold at the split-off point or...
Sunland Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period: Product Sales Value at Split-off Additional Variable Costs Sales Value after Further Processing Green lumber $152600 $23200 $175800 Rough lumber 117000 26700 163800 Sawdust 97000 18500 123600 Which products should be processed further? All three products. Rough lumber and sawdust. Green lumber and rough lumber. Green lumber and sawdust. **Hello, I...
Multiple Choice Question 127 Sheridan Company produces several products that can be sold at the split-off...
Multiple Choice Question 127
Sheridan Company produces several products that can be sold at
the split-off point or processed further and then sold. The
following results are from a recent period:
Product
Sales Value
at Split-off
Additional
Variable Costs
Sales Value after
Further Processing
Green lumber
$159600
$24000
$178000
Rough lumber
114000
26100
159600
Sawdust
94000
17900
120000
What is the increase in profit if the appropriate products are
processed further?
$27600
$90000
$235600
$22000
SELL AT SPLIT – OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION Lauricella Inc. produces...
SELL AT SPLIT – OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION Lauricella Inc. produces three products from a common set of inputs for $95,000. Other sales and cost data follow: Unit Sales Price ____ Costs After At After further Split-off Product Quantity Split-off Processing Point__ Regular 8,000 $ 8 $ 10 $ 10,000 Special 5,000 5 8 15,000 Premium 4,000 6 10 20,000 REQUIRED: Which products should...
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.
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.
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Product X Product Y Total Allocated joint processing costs $ 28,500 $ 19,000 $ 47,500 Sales value at split-off point...
The Green Company processes unprocessed goat milk up to the split-off point where two products, condensed...
The Green Company processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of October: Direct Materials processed: 105,000 gallons (after shrinkage) Production: Condensed goat milk 45,500 gallons Skim goat milk 59,500 gallons Sales: Condensed goat milk $4.50 per gallon Skim goat milk $4.00 per gallon The costs of purchasing the of unprocessed goat milk and processing it up to the split-off point to yield a total of 105,000...
A company manufactures three products using the same production process. The costs incurred up to the split-off point ar...
A company manufactures three products using the same production
process. The costs incurred up to the split-off point are $190,500.
These costs are allocated to the products on the basis of their
sales value at the split-off point. The number of units produced,
the selling prices per unit of the three products at the split-off
point and after further processing, and the additional processing
costs are as follows.
Product
Number
of
Units Produced
Selling
Price
at Split-Off
Selling
Price
after...
1. Why might it be a mistake to allocate fixed costs to different products or segments? 2. If there are limits on the amount of a resource that we can use, how do we best decide how to use that resource? 3. Should we allocate joint costs among joint products? 4. How do we decide whether a product ought to be sold at the split-off point or processed further?
XYZ Company makes two products, W and P, in a joint process. At the split-off point, 60,000 units of Product W and 50,000 units of Product P are available each month. Monthly joint production costs total $120,000 and are allocated to the two products equally. Product W can either be sold at the split-off point for $5.60 per unit or it can be processed further and then sold for $8.80 per unit. If Product W is processed further, addi tional...
Multiple Choice Question 127
Sheridan Company produces several products that can be sold at
the split-off point or processed further and then sold. The
following results are from a recent period:
Product
Sales Value
at Split-off
Additional
Variable Costs
Sales Value after
Further Processing
Green lumber
$159600
$24000
$178000
Rough lumber
114000
26100
159600
Sawdust
94000
17900
120000
What is the increase in profit if the appropriate products are
processed further?
$27600
$90000
$235600
$22000
A company manufactures three products using the same production
process. The costs incurred up to the split-off point are $190,500.
These costs are allocated to the products on the basis of their
sales value at the split-off point. The number of units produced,
the selling prices per unit of the three products at the split-off
point and after further processing, and the additional processing
costs are as follows.
Product
Number
of
Units Produced
Selling
Price
at Split-Off
Selling
Price
after...
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