Carina Company produces sanitation products after processing specialized chemicals; The following relates to its activities: 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. At an additional cost of $400, Carina can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack.
Carina Company produces sanitation products after processing specialized chemicals; The following relates to its activities: 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. At an additional cost of $400, Carina can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 4CMA: Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in...
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Carina Company produces sanitation products after processing specialized chemicals; The following relates to its activities:
- 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is
processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a
gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. - At an additional cost of $400, Carina can process the 400 grams of Crystal into 500
grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can
be sold for $2 per pack.
Required:
1. Allocate the joint cost to the Detergent and the Softener using the following:
a. Sales value at split-off method
b. NRV method
2. Should Carina have processed each of the products further? What effect does the allocation method have on this decision?
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VIEWStep 2: Working Notes:- Determine the total joint cost to be allocated:
VIEWStep 3: (1-a) Allocate the joint cost to Detergent and Softener using Sales value at split-off method:
VIEWStep 4: (1-b) Allocate the joint cost to Detergent and Softener using Net realizable value method:
VIEWStep 5: (2) Decide if Carina should have processed each of the products further:
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