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 15E
To determine
Compute the amount of joint production costs allocated to each type of product using the physical unit’s method.
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lowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans can be
converted into 500 pounds of soy meal and 100 gallons of soy oil. This process incurs joint costs of $ 540. At splitoff
point; soy meal can be sold for $4 per pound, and soy ol can be sold for $5 per gallon.
ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $1500. Each
pound of soy cookles can be sold for $6 per pound.
The 100 gallons of soy oil can be packaged at an additional cost of $300 and made into 400 liters of Soyola. Each liter
of Soyola can be sold for $3.
(For each item below write your answers inside the boxes.)
a) What is the total sales value (from both products) at splitoff point? Ans. = $
b) Using sales value at splitoff method, what amount of the joint costs ($ 540) would be allocated to soy meal Ans, = $
C) Using net realizable value method, what amount of the joint costs ($ 540) would be allocated to Soyola?…
Nervana Soy Products (NSP) buys soybeans and processes them into other soy products. Each ton of soybeans that NSP purchases for $350 can be converted for an additional $210 into 650 lbs of soy meal and
100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.32 and soy oil can be sold in bulk for $4.5 per gallon.
NSP can process the 650 pounds of soy meal into 750 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.32 per pound. The 100 gallons of soy oil can be
packaged at a cost of $230 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.15.
Read the requirements.
Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method.
a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.)
Sales value of total production at splitoff…
Saskatchewan Soy Products (SSP) buys soy beans and processes them into other soy products. Each tonne of soy
beans that SSP purchases for $280 can be converted for an additional $200 into 550 lbs of soy meal and 100
gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.48, and soy oil can be sold in bulk for $4.75 per
gallon.
SSP can process the 550 lbs of soy meal into 700 lbs of soy cookies at an additional cost of $380. Each pound of
soy cookies can be sold for $2.48 per pound. The 100 gallons of soy oil can be packaged at a cost of $200 and
made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.35.
Required
1. Allocate the joint cost to the cookies and the Soyola using:
a. Sales value at splitoff method
b. NRV method
2. Should the company have processed each of the products further? What effect does the allocation method have
on this decision?
www
Requirement 1a. Allocate the joint cost to the cookies and the Soyola using the sales value at…
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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- Illion Soy Products (ASP) buys soybeans and processes them into other soy products. Each ton of soybeans that ASP purchases for $250 can be converted for an additional $180 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.08 and soy oil can be sold in bulk for $4 per gallon. ASP can process the 700 pounds of soy meal into 800 pounds of soy cookies at an additional cost of $370. Each pound of soy cookies can be sold for $2.08 per pound. The 80 gallons of soy oil can be packaged at a cost of $200 and made into 320 quarts of Soyola. Each quart of Soyola can be sold for $1.45. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Sales value of total production at splitoff…arrow_forwardScott Grant has just inherited his family’s pecan farm. He estimates that he can produce 10,000 pounds of pecans for approximately $12,500. He can sell the pecans in the shell as they come from the trees for $3.00 per pound. Alternatively, Scott can have the pecans processed further at a cost of $0.35 per pound and sell them as shelled pecans for $4.00. 1. Define joint cost. 2. Define split-off point. 3. Should Scott sell the pecans for $3.00 as they come from the trees or process the pecans further and sell them at $4.00 as shelled pecans? Provide figures to support your conclusion.arrow_forwardCluck Farms, Inc. produces a crop of chickens at a total cost of $66,000. The production generates 60,000 chickens that can be sold for $1.50 each to a slaughtering company, or the chickens can be slaughtered in house and then sold for $2.75 each. It costs $55,000 more to turn the annual chicken crop into chicken meat. Question: If Chuck Farms slaughters the chickens, how much is the incremental profit or loss?arrow_forward
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