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

Chambers Company Chambers Company produces two products from a joint process: X and Z.Joint processing costs for this production cycle are $8,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
X	1,500	$6.00	$3.50	$1.00	$ 7.50
Y	2,200	9.00	5.00	3.00	11.25

If X and Z are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Chambers Company.Using a physical measure,what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)?

Joplin Corporation produces three products from a common manufacturing process.The total joint cost of producing 2,000 pounds of Product A;1,000 pounds of Product B;and 1,000 pounds of Product C is $7,500.Selling price per pound of the three products are $15 for Product A;$10 for Product B;and $5 for Product C.Joint cost is allocated using the sales value method. Required: a.Compute the unit cost of Prochuct A if all three products are main products b. Compute the unit cost of Prochict A if Products A and B are main products and Product C is a by-prochuct for which the cost reduction method is used

Baker Company Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00. Refer to Baker Company.Using sales value at split-off,what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

The net realizable value approach is used to account for scrap and by-products when the net realizable value is significant.

Bolton Company produced three joint products at a joint cost of $100,000.These products were processed further and sold as follows: A \ 245,000 \ 200,000 330,000 300,000 175,000 100,000 The company has had an opportunity to sell at split-off directly to other processors.If that alternative had been selected,sales would have been:A,$56,000;B,$28,000;and C,$56,000. The company expects to operate at the same level of production and sales in the forthcoming year. Required: Consider all the available information and assume that all costs incurred after split-off are variable. a. Could the company increase net income by altering its processing decisions? If so, what would be the expected overall net income? b. Which products should be processed further and which should be sold at split-off?

Shiny Floors Company Shiny Floors 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. )

	Barrels	Sales price per barrel at split-off	Disposal cost per barrel at split-off	Further processing costs	Final sales price per barrel
C	750	$10.00	$6.50	$2.00	$13.50
D	1,000	8.00	4.00	2.50	10.00
E	1,400	11.00	7.00	4.00	15.50
G	2,000	15.00	9.50	4.50	19.50

If Shiny Floors 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 Shiny Floors Company.Using a physical measurement method,what amount of joint processing cost is allocated to Product C?

Baker Company Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00. Refer to Baker Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Baker Company Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00. Refer to Baker Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary products.

Allocating joint costs based upon a physical measure considers the revenue-generating ability of individual products.

If two or more products share a common process before they are separated,the joint costs should be assigned in a manner that

Which of the following has sales value? $\text {\underline{ By-proclucts} }$                                     $\text {\underline{ Waste} }$

Approximated net realizable value at split-off for joint products is computed as

Shiny Floors Company Shiny Floors 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. )

	Barrels	Sales price per barrel at split-off	Disposal cost per barrel at split-off	Further processing costs	Final sales price per barrel
C	750	$10.00	$6.50	$2.00	$13.50
D	1,000	8.00	4.00	2.50	10.00
E	1,400	11.00	7.00	4.00	15.50
G	2,000	15.00	9.50	4.50	19.50

If Shiny Floors 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 Shiny Floors Company.Using sales value at split-off,what amount of joint processing cost is allocated to Product C?

The point at which individual products are first identifiable in a joint process is referred to as the split-off point.

The point at which individual products are first identifiable in a joint process is referred to as the ________.

While preparing a salad,the chef removes the core from a head of lettuce.This core would be classified as

Joint cost allocation is useful for

For purposes of allocating joint costs to joint products using the relative sales value at split-off method,the costs beyond split-off

The split-off point is the point at which