Exam 16: Cost Allocation: Joint Products and Byproducts

Pilgrim Corporation processes frozen turkeys.The company has not been pleased with its profit margin per product because it appears that the high value items have too few costs assigned to them,while the low value items have too many costs assigned to them.The processing results in several products,the primary one of which is frozen small turkeys.Other products include frozen parts such as wings and legs,byproducts such as skin and bones,and unused scrap items. Required: What may be the cost assignment problem if a key consideration is the value of the products being sold?

Which of the following is true of the physical-measure approach of allocating joint costs?

When a single manufacturing process yields two products,one of which has a relatively high sales value compared to the other,the two products are respectively known as ________.

Which of the following is a possible reason to allocate joint costs to individual products?

When the selling prices of all products at the splitoff point are unavailable,the ________ is the best alternative for allocating joint costs.

When a joint production process yields two or more products with high total sales values,these products are called joint products.

The sales value at splitoff method ________.

The production method for recognizing byproducts reduces the cost of manufacturing the main or joint products in the income statement.

An example of allocating joint costs using physical measures is allocating joint costs based on ________.

Answer the following questions using the information below: The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June: Direct Materials processed: 28,000 gallons production: butter Cream 12,500 gallons Condensed Milk 15,500 gallons Sales: Gutter Cream 12,000 gallons Condensed Milk 15,006 gallons Sales: butter Cream \ 2.5 per gallon Condensed Milk \ 5.5 per gallon Separable costs in total: butter Cream \ 13,500 Condensed Milk \ 33,708 The costs of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 28,000 gallons of saleable product was $46,000. The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. -What is the allocated joint costs of Condensed Milk?

Joint processing costs are relevant in deciding whether to process the product further.

Separable costs include manufacturing costs only.

Answer the following questions using the information below: Bismite Corporation 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 October: Trees processed: 250 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 174,000 at \ 0.12 per page pencil casings 178,500 at \ 0.15 per casing The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. -If the sales value at splitoff method is used,what are the approximate joint costs assigned to ending inventory for paper?

Which of the following statements is true of the methods for allocating joint costs?

Zenon Chemical,Inc.,processes pine rosin into three products: turpentine,paint thinner,and spot remover.During May,the joint costs of processing were $240,000.Production and sales value information for the month is as follows: Product Units Produced Sales Value at Splitoff Point Turpentine 15,000 liters \ 120,000 Paint thinner 15,000 liters 100,000 Spot remover 7,500 liters 50,000 Required: Determine the amount of joint cost allocated to each product if the physical-measure method is used.

Before the splitoff point,decisions relating to the sale or further processing of each identifiable product cannot be made independently of decisions about the other products.

Outputs with a negative sales value are ________.

Answer the following questions using the information below: The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols. Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the splitoff point are $187,500. -If joint costs are allocated based upon the sales value at splitoff,what amount of joint costs will be allocated to the widgets?

The net realizable value method ________.

Answer the following questions using the information below: The Green 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: $\text { Direct Materials processed: } \quad 98,000 \text { gallons (after shrinkage) }$ Proauction: Condensed goat milk 42,500 gallons Skim goat milk 55,500 gallons Sales: Condensed goat milk \ 3.50 per gallon skim goat milk \ 2.50 per gallon The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff point to yield a total of 98,000 gallons of saleable product was $184,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $20 per gallon. Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon. There are no beginning and ending inventory balances. -Using the sales value at splitoff method,what is the gross-margin percentage for condensed goat milk at the splitoff point?