Exam 15: Cost Allocation: Joint Products and Byproducts

Chem Manufacturing Company processes direct materials up to the split off point, where two products (X and Y) are obtained and sold. The following information was collected for the month of November. 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 split off 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 per unit were the same as November. What is the approximate amount of joint costs in Product Y's ending inventory if the physical volume method is used and the company uses the FIFO inventory method?

All of the following changes may indicate a change in product classification of a manufacturing process which has a split off point EXCEPT

BC Lumber processes timber into four products. During January the joint costs of processing were $280,000. There was no beginning inventory at the beginning of the month. Production and sales value information for the month were as follows: Sales Value at Required: Determine the value of ending inventory if the sales value at split off method is used for product costing. Round to 3 decimal places when necessary.

The net realizable value method is generally used for products or services that are processed and after splitoff additional value is added to the product and a selling price can be determined.

For each of the following items tell whether it is a main product, joint product, byproduct, or scrap. Assume traditional situations. a. Bones from a butcher shop b. Sawdust from a sawmill c. Sawdust from a furniture manufacturer d. Fuel oil from petroleum processing e. Salt from a salt works process f. Broth from cooking food g. Raw milk for dairy processing h. Skim milk from dairy processing

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. -Which method of allocating costs would be used if the selling prices of all products at the splitoff point are unavailable?

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. -Using the physical measures method, the joint costs allocated to Jarlon would be:

Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

If joint products end up with the same gross margin percentage, which of the following is true?

What type of cost is the result of an event that results in multiple products simultaneously?

Sweet Sugar Company processes sugar beets into three products. During April the joint costs of processing were $240,000. Production and sales value information for the month were as follows: Sales Value at Required: Determine the amount of joint cost allocated to each product if the sales value at split off method is used.

The estimated net realizable method allocates joint costs on the basis of

Distinguish between the two principal methods of accounting for byproducts, the production byproduct method and the sale byproduct method. Briefly discuss the relative merits (or lack thereof) of each.

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. -When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean?

Use the information below to answer the following question(s). Beverage Drink Company processes direct materials up to the split off 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 split off 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 is Product Z5's and Product W3's respective production cost per unit, assuming the company allocates joint costs on the basis of net realizable value?

Separable costs are assignable after the splitoff point.

Use the information below to answer the following question(s). Chem Manufacturing Company processes direct materials up to the split off 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 split off 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 X's approximate production cost per unit using the physical volume method?

If the value of a byproduct rises significantly, it could also be viewed as a joint product.

Favata Corporation processes a single material into three separate products A, B, and C . During September, the joint costs of processing were $600,000. Production and sales value information for the month were as follows: Required: Determine the amount of joint cost allocated to each product if the constant gross-margin percentage NRV method is used.

Use the information below to answer the following question(s). Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the split off 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 October. Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap) Cost of purchasing 50 trees and processing them up to the split off point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500. Raynor Manufacturing's accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock. -What is the paper's production approximate cost per unit if the sales value at split off method is used?