Question 1

Why is the net realizable value of scrap used to lower estimated overhead costs in setting a predetermined overhead rate in a job order costing situation in which scrap is expected on most jobs?

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Question 2

Moore Company Moore Company produces three products from the same process and incurs joint processing costs of $3,000.

	Gallons	Sales price per gallon at split-off	Disposal cost per gallon at split-off	Further processing costs	Final sales price per gallon
M	2,300	$ 4.50	$1.25	$1.00	$ 7.00
N	1,100	6.00	3.00	2.00	10.00
Q	500	10.00	8.00	2.00	15.00

Disposal costs for the products if they are processed further are: M,$3.00;N,$5.50;Q,$1.00. Refer to Moore Company.What amount of joint processing cost is allocated to the three products using sales value at split-off?

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Moore Company produces three products from...

Question 3

Lamar Company
Lamar Company produces only two products and incurs joint processing costs that total $3,750.Products Alpha and Beta are produced in the following quantities during each month: 4,500 and 6,000 gallons,respectively.Lamar Company also runs one ad each month that advertises both products at a cost of $1,500.The selling price per gallon for the two products are $20 and $17.50,respectively.
Refer to Lamar Company.What amount of joint processing costs is allocated to each product based on gallons produced?

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Lamar Company produces only two products...

Question 4

Knight Corporation manufactures three identifiable product lines,Products A,B,and C,from a basic processing operation.The cost of the basic operation is $320,000 for a yield of 5,000 tons of Product A;2,000 tons of Product B;and 1,000 tons of Product C.The basic processing cost is allocated to the product lines in proportion to the relative weight produced.
Knight Corporation does both the basic processing work and the further refinement of the three product lines.After the basic operation,the products can be sold at the following prices per metric ton:
Product A-$60
Product B-$53
Product C-$35
Costs to refine each of the three product lines follow:
                                                                  $\text {\underline{ Product Lines} }$
$\begin{array}{llll}
\text { Variable cost per metric ton } & \underline{A} & \underline{B} & \underline{C} \
\text { Total fixed cost } & \$ 8 & \$ 7.000 & \$ 60000
\end{array}$
 
The fixed cost of the refining operation will not be incurred if the product line is not refined.
The refined products can be sold at the following prices per metric ton:
Product A-$75
Product B-$65
Product C-$40
Required:
 a.Determine the total wit cost of each product line in a refined state.
b. Which of the three prochuct lines, if any, should be refined and which should be sold after the basic processing operation? Show computations.

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Question 5

Lamar Company
Lamar Company produces only two products and incurs joint processing costs that total $3,750.Products Alpha and Beta are produced in the following quantities during each month: 4,500 and 6,000 gallons,respectively.Lamar Company also runs one ad each month that advertises both products at a cost of $1,500.The selling price per gallon for the two products are $20 and $17.50,respectively.
Refer to Lamar Company.What amount of advertising cost is allocated to each product based on sales value?

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Lamar Company produces only two products...

Question 6

Briefly discuss the four decisions that management must make concerning joint processes.

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Question 7

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

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Question 8

Detroit Manufacturing Company makes three products: A and B are considered main products and C a by-product.
Production and sales for the year were:
220,000 lbs.of Product A,salable at $6.00
180,000 lbs.of Product B,salable at $3.00
50,000 lbs.of Product C,salable at $.90
Production costs for the year:
 Joint costs                                                              $ \$ 276,600 $
$\text { Costs after separation: }$
Product A                                                                  320,000
Product B                                                                  190,000
Product C                                                                  6,900 
Required:Using the by-product revenue as a cost reduction and net realizable value method of assigning joint costs,compute unit costs (a)if C is a by-product of the process and (b)if C is a by-product of B.

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Question 9

Briefly discuss the restrictions and requirements on service organizations and not-for-profits that relate to joint cost allocation.

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Question 10

Ardmore Company produces two main products jointly, A and B, and C, which is a by-product of B. A and B are produced from the same raw material. C is manufactured from the residue of the process creating B. Costs before separation are apportioned between the two main products by the net realizable value method. The net revenue realized from the sale of C is deducted from the cost of B. Data for April were as follows:

	Gallons	Sales price per gallon at split-off	Disposal cost per gallon at split-off	Further processing costs	Final sales price per gallon
M	2,300	$ 4.50	$1.25	$1.00	$ 7.00
N	1,100	6.00	3.00	2.00	10.00
Q	500	10.00	8.00	2.00	15.00

Required: Determine the gross profit for April.

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Question 11

Bolton Company produced three joint products at a joint cost of $100,000.These products were processed further and sold as follows:
 $\begin{array}{lll}
\text{\underline { Product } }& {\text{\underline { Sales }}} & \text{\underline { Additional ProcessingCosts }} \
\text { A } & \$ 245,000 & \$ 200,000 \
\mathrm{B} & 330,000 & 300,000 \
\mathrm{C} & 175,000 & 100,000
\end{array}$
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?

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Question 12

Briefly discuss the net realizable value at split-off point method of allocating joint costs.

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Question 13

Discuss briefly the three monetary measurement techniques of joint cost allocation.

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Question 14

Arnold Company processes raw material in Department 1 from which come two main products,A and B,and a by-product, C.A is further processed in Department 2,B in Department 3,and C in Department 4.The value of the by-product reduces the cost of the main products,and sales value is used to allocate joint costs.

	Gallons	Sales price per gallon at split-off	Disposal cost per gallon at split-off	Further processing costs	Final sales price per gallon
M	2,300	$ 4.50	$1.25	$1.00	$ 7.00
N	1,100	6.00	3.00	2.00	10.00
Q	500	10.00	8.00	2.00	15.00

Required: a. Commute unit costs for A and B Commute unit costs for A and B b. Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty? Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty? c. Recompute a and b allocating cost based on net realizable value Recompute a and b allocating cost based on net realizable value

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Question 15

Moore Company Moore Company produces three products from the same process and incurs joint processing costs of $3,000.

	Gallons	Sales price per gallon at split-off	Disposal cost per gallon at split-off	Further processing costs	Final sales price per gallon
M	2,300	$ 4.50	$1.25	$1.00	$ 7.00
N	1,100	6.00	3.00	2.00	10.00
Q	500	10.00	8.00	2.00	15.00

Disposal costs for the products if they are processed further are: M,$3.00;N,$5.50;Q,$1.00. Refer to Moore Company.What amount of joint processing cost is allocated to the three products using net realizable value at split-off?

Accepted Answer