Exam 15: Cost Allocation: Joint Products and Byproducts

Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed: 10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage) The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November. -What is product Y's approximate joint production cost if the sales value at splitoff point method is used?

Answer the following question(s)using the information below: The Morton Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result.The following information was collected for the month of October: The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances. -What is the estimated net realizable value of Xyla at the splitoff point?

Use the information below to answer the following question(s): Yip Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of May: The cost of purchasing 100 trees and processing them up to the splitoff point to yield 70,000 sheets of paper and 60,000 pencil casings is $3,000.Yip's Manufacturing's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper. -If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?

Peachland Fruit Ltd.harvests blueberries.After harvest, the company sells some berries fresh, freezes others, and processes some into juice.During the summer the joint costs of processing the berry products were $620,000.Any separable costs for each product are negligible and are not traced.There were no beginning or ending inventories for the summer.Production and sales value information for the summer were as follows: Required: Determine the amount allocated to each product if the sales value at splitoff method is used and compute the cost per case for each product.

Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed: 10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage) The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November. -If joint products end up with the same gross margin percentage, which of the following is TRUE?

Use the information below to answer the following question(s).Beverage Drink Company processes direct materials up to the splitoff point, where two products, A and B, are obtained.The following information was collected for the month of July: Direct materials processed: 2,500 litres (with 20 percent shrinkage) Cost of purchasing 2,500 litres of direct materials and processing it up to the splitoff point to yield a total of 2,000 litres of good products was $4,500.There were no inventory balances of A and B.Product A may be processed further to yield 1,375 litres of Product Z5 for an additional processing cost of $150.Product Z5 is sold for $25.00 per litre.There was no beginning inventory and ending inventory was 125 litres.Product B may be processed further to yield 375 litres of Product W3 for an additional processing cost of $275.Product W3 is sold for $30.00 per litre.There was no beginning inventory and ending inventory was 25 litres. -What are the expected final sales values of production if Product Z5 and Product W3 are produced?

The cause-and-effect criterion is not present when joint costing is used.

It is easier to cost inventory if the joint products are sold before the splitoff point without further processing.

When a product is the result of a joint process, the decision to process the product past the splitoff point further should be influenced by the

Answer the following question(s)using the information below.The Oxnard Corporation processes a liquid component up to the splitoff point where two products, Mr.DirtOut and Mr.SinkClean, are produced and sold.There was no beginning inventory.The following material was collected for the month of January: The cost of purchasing 250,000 litres of direct materials and processing it up to the splitoff point to yield a total of 242,500 litres of good product was $380,000. -What are the physical volume proportions to allocate joint costs for Mr.DirtOut and Mr.SinkClean, respectively?

Which of the following is NOT a reason underlying the importance of allocations for inventory costing and cost of goods sold computations?

Use the information below to answer the following question(s): Yip Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of May: The cost of purchasing 100 trees and processing them up to the splitoff point to yield 70,000 sheets of paper and 60,000 pencil casings is $3,000.Yip's Manufacturing's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper. -What are the paper's and the pencils' approximate weighted cost proportions using the sales value at splitoff method, respectively?

Which of the following entries is the initial entry to recognize a byproduct in the general ledger, based on the accounting method of recognizing byproducts at the time of production?

Use the information below to answer the following question(s).Troy Company processes 15,000 litres of direct materials to produce two products, Product X and Product Y.Product X, a byproduct, sells for $4 per litre, and Product Y, the main product, sells for $50 per litre.The following information is for August: The manufacturing costs totalled $95,000. -What is the net effect to the income statement for the sale of byproduct, if byproducts are recognized at the point of sale?

Golden Company uses one raw material, gold ore, for all its products.It spends considerable time getting the gold from the ore before it starts the actual processing of the finished products, rings, lockets, etc.Traditionally, the company made one product at a time and charged the product with all costs of production, from ore to final inspection.However, in recent months the cost accounting reports have been somewhat disturbing to management.It seems that some of the finished products are costing more than they should, even to the point of approaching their retail value.It has been noted by the accounting manager that this problem began when the company started buying ore from different parts of the world, some of which requires difficult extraction methods.Required: Can you explain how the company might change its accounting system to better reflect the reporting problems? Are there other problems with the purchasing area?

Use the information below to answer the following question(s).Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar. -Using the physical measures method, the weightings for joint cost allocations for Jarlon and Kharton respectively are

Scrap frequently has a zero sales value.

Assigning joint costs when only a portion of a business's products are sold to a single customer is an example of which of the following?

Answer the following question(s)using the information below: The Morton Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result.The following information was collected for the month of October: The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances. -The constant gross margin percentage NRV method of joint cost allocation

A byproduct has a minimal sales value.