Exam 16: Cost Allocation: Joint Products and Byproducts

The Green Company processes unprocessed goat milk up to the split-off 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 of unprocessed goat milk and processing it up to the split-off point to yield a total of 100,500 gallons of saleable product was $191,480.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 $6 per usable gallon.Xyla can be sold for $21 per gallon. Skim goat milk can be processed further to yield 56,700 gallons of skim goat ice cream,for an additional processing cost per usable gallon of $6.The product can be sold for $14 per gallon. There are no beginning and ending inventory balances. What is the estimated net realizable value of Xyla at the split-off point?

The Green Company processes unprocessed goat milk up to the split-off 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 of unprocessed goat milk and processing it up to the split-off point to yield a total of 102,000 gallons of saleable product was $188,480.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 58,200 gallons of skim goat ice cream,for an additional processing cost per usable gallon of $4.The product can be sold for $12 per gallon. There are no beginning and ending inventory balances. What is the estimated net realizable value of the skim goat ice cream at the split-off point?

Joint costs are incurred beyond the split-off point and are assignable to individual products.

Oregon Lumber processes timber into four products.During January,the joint costs of processing were $280,000.There was no inventory at the beginning of the month.Production and sales value information for the month is as follows: 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.

How does the sales value at split-off method allocate joint costs?

The Kenton Company processes unprocessed milk to produce two products,Butter Cream and Condensed Milk.The following information was collected for the month of June: The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 23,000 gallons of saleable product was $48,000. The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.Which of the following statements is true of Kenton's joint cost allocations?

Under the benefits-received criterion,the physical-measure method is much less desirable than the sales value at split-off method.Why?

Which of the following statements is true of the production method of accounting for byproducts?

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: Required: Determine the amount of joint cost allocated to each product if the physical-measure method is used.

Allocating joint costs to individual products can be helpful for litigation settlement purposes in which the costs of joint products or services are key inputs.

The Kenton Company processes unprocessed milk to produce two products,Butter Cream and Condensed Milk.The following information was collected for the month of June: The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 22,500 gallons of saleable product was $51,000. 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? (Round intermediary percentages to the nearest hundredth. )

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: The costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 31,500 gallons of saleable product was $109,025. The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.If separable costs of Butter Cream was $19,000 and constant gross margin was 30%,what would have been the total allocated joint costs of production?

In each of the following industries,identify possible joint (or severable)products at the split-off point. a.Coal b.Petroleum c.Dairy d.Lamb e.Lumber f.Cocoa Beans g.Christmas Trees h.Salt i.Cowhide

Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings)emerge from the process.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: The cost of purchasing 330 trees and processing them up to the split-off point to yield 190,000 sheets of paper and 190,000 pencil casings is $15,500. Bismite's accounting department reported no beginning inventory. If the sales value at split-off method is used,what is the approximate production cost for each pencil Casing? (Round intermediary percentages to the nearest hundredth. )

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

The juncture in a joint production process when two products become separable is the byproduct point.

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

The Alfarm Corporation processes raw milk up to the split-off point where two products,cream and liquid skim,are produced and sold.There was no beginning inventory.The following material was collected for the month of February: The cost of purchasing 760,000 gallons of direct materials and processing it up to the split-off point to yield a total of 738,000 gallons of good product was $2,350,000.When using the physical-volume method,what is Cream's approximate production cost per gallon? (Round intermediary percentages to the nearest hundredth. )

What are the four methods of allocating joint costs to individual products? Which of these methods is preferred,and what are two advantages of this method?

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: The costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 31,000 gallons of saleable product was $146,450. 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?