Exam 11: Allocation of Joint Costs and Accounting for By-Products

Melbourne Company Melbourne Company manufactures three products in a joint process which costs $25,000. Each product can be sold at split-off or processed further and then sold. 10,000 units of each product are manufactured. The following information is available for the three products: Refer to Melbourne Company. If Product A is processed beyond the split-off point, profit will:

Providence Manufacturing Company makes three products: A and B are considered main products and C a by-product. Production and sales for the year were: 220,000 lbs. of Product A, salable at $6.00 180,000 lbs. of Product B, salable at $3.00 50,000 lbs. of Product C, salable at $.90 Production costs for the year: Required: Using the by-product revenue as a cost reduction and net realizable value method of assigning joint costs, compute unit costs (a) if C is a by-product of the process and (b) if C is a by-product of B.

Sales revenue at split-off less disposal costs equals ______________________________.

Davis Company Davis Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100. If the products are processed further, Davis Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00. Refer to Davis Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product B (round to the nearest dollar)?

Briefly discuss the six steps in the allocation process.

Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00. Refer to Brite Surface Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product E?

Joint costs are most frequently allocated based upon relative

Ellis Company Ellis Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000. If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Ellis Company. Using approximated net realizable value at split-off, what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)?

Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the product.

Joint costs are useful for

Not-for-profit organizations are required by the ____ to allocate joint costs.

Two methods of allocating joint costs to individual products are ________________________________________ and ________________________________________.

The method of pricing by-products/scrap where no value is assigned to these items until they are sold is known as the

Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00. Refer to Brite Surface Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product E?

Davis Company Davis Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100. If the products are processed further, Davis Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00. Refer to Davis Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product B (round to the nearest dollar)?

Costs that are incurred after the split-off point in a production process are referred to as ______________________________.

Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00. Refer to Brite Surface Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product G?

Incremental separate costs are defined as all costs incurred between ____ and the point of sale.

Johnson Company Ellis Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000. If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Johnson Company. Which products would be processed further?

Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.) If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00. Refer to Brite Surface Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product D?