Fair Manufacturing Company produces two main products and a by-product out of a joint process. The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are allocated to the main products. Data regarding Fair 's operations for the current month are presented in the chart below. During the month, Fair incurred joint production costs of $2,520,000. The main products are not marketable at the split-off point and, thus, have to be processed further. Product A Product B By-product 90,000 Monthly output in pounds Sale of January 2021 in pounds Selling Price per pound 150,000 60,000 40,000 100,000 $30 $14 $2 Separable process costs S540,000 S660,000

Fair Manufacturing Company produces two main products and a by-product out of a joint process. The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are allocated to the main products. Data regarding Fair 's operations for the current month are presented in the chart below. During the month, Fair incurred joint production costs of $2,520,000. The main products are not marketable at the split-off point and, thus, have to be processed further. Product A Product B By-product 90,000 Monthly output in pounds Sale of January 2021 in pounds Selling Price per pound 150,000 60,000 40,000 100,000 $30 $14 $2 Separable process costs S540,000 S660,000

Name: Fair Manufacturing Company produces two main products and a by-produc
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Fair Manufacturing Company produces two main products and a by-product out of a joint process. The netrealizable value of the by-product is used to reduce the joint production costs before the joint costs areallocated to the main products. Data rega

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 14E: LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of...

See similar textbooks

Similar questions

Laramie Industries produces two joint products, H and C. Prior to the split-off point, the company incurred costs of $66,000. Product H weighs 44 pounds and product C weighs 66 pounds. Product H sells for $250 per pound and product C sells for $295 per pound. Based on a physical measure of output, allocate joint costs to products H and C.
Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring 250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: An assistant in the companys cost accounting department was overheard saying ...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort. Which of the following strategies should be recommended for Oakes?
Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were 50,000, and 14,000 units of overs and 36,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, 18,000; unders, 23,040. Overs sell for 2.00 per unit; unders sell for 3.14 per unit. Required: 1. Allocate the 50,000 joint costs using the estimated net realizable value method. 2. Suppose that overs could be sold at the split-off point for 1.80 per unit. Should Pacheco sell overs at split-off or process them further? Show supporting computations.
Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $1,000,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $10,000,000. Additional information includes: Required: Determine the allocation of joint costs using the net realizable value method, rounding the sales value percentages to the nearest tenth of a percent. (Hint: Reduce the amount of the joint costs to be allocated by the amount of the by-product revenue.)
Adirondack Bat Co. processes rough timber to obtain three grades of lumber, A, B, and C that are then made into baseball bats. The company allocates joint costs to the joint products on the basis of the sales value at the split-off point. During the month of May, Adirondack incurred total joint production costs of $300,000 in producing the following: Make the journal entry to transfer the finished lumber to separate work in process inventory accounts for each product. What would be the allocation of the joint costs if the company were to use the physical measure method?
LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of Product Y, and 1,000 units of Product Z is $50,000. The unit sales values of the three products at the split-off point are Product X–$30, Product Y–$100, and Product Z–$90. Ending inventories include 200 units of Product X, 300 units of Product Y, and 100 units of Product Z. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their sales values at split-off. Assume that Product Z can be sold for $120 a unit if it is processed after split-off at a cost of $10 a unit. Compute the amount of joint cost that would be included in the ending inventory valuation of the three products on the basis of their net realizable values.
Salt Company manufactures products J, K, and L in a joint process. The company incurred $480,000 of joint processing costs during the period just ended and had the following data that related to production: An analysis revealed that all costs incurred after the split-off point are variable and directly traceable to the individual product line. Required: A. If Salt allocates joint costs on the basis of the products' sales values at the split-off point, what amount of joint cost would be allocated to product J? B. If production of J totaled 50,000 gallons for the period, determine the relevant cost per gallon that should be used in decisions that explore whether to sell at the split-off point or process further? Briefly explain your answer. C. At the beginning of the current year, Salt decided to process all three products beyond the split-off point. If the company desired to maximize income, did it err in regards to its decision with any of the products and by how much?
Salt Company manufactures products J, K, and L in a joint process. The companyincurred $480,000 of joint processing costs during the period just ended and had thefollowing data that related to production: An analysis revealed that all costs incurred after the split-off point are variable anddirectly traceable to the individual product line.Required:A. If Salt allocates joint costs based on the products' sales values at the split-offthe point, what amount of joint cost would be allocated to product J?B. If the production of J totaled 50,000 gallons for the period, determine the relevant costper gallon that should be used in decisions that explore whether to sell at the split-offpoint or process further? Briefly explain your answer.C. At the beginning of the current year, Salt decided to process all three productsbeyond the split-off point. If the company desired to maximize income, did it err inregards to its decision with any of the products and by how much?
Tanner Corporation produced 3,600 units, consisting of three separate products, in a joint process for the year. The market for these products was so unstable that it was not practical to estimate the selling price of the products. A cost of $488,000 was incurred in the joint process. Product X's production was 80% of product Y's while product Z's production was 120% of product Y's. What is the amount of the joint cost allocable to product X assuming Tanner uses the physical quantities method of allocation? Note: Do not round intermediate calculations. O $130,133 $133,523 $158,002 Saved $160.325
Allison, Inc., produces two products, X and Y, in a single joint process. Last month the joint costs were $75,000 when 10,000 units of Product X and 15,000 units of Product Y were produced. Addi-tional processing costs were $15,000 for Product X and $10,000 for Product Y. Product X sells for $10, and Product Y sells for $5. The joint cost allocations to Products X and Y using the net realizable value method would be: Group of answer choices $42,500 $32,500 $30,000 $45,000 $42,857 $32,143 $45,000 $30,000 none of the above. Flag question: Question 2 Question 23 pts The joint cost allocations to Products X and Y using the physical units method would be: Group of answer choices $30,000 $45,000 $42,500 $32,500 $42,857 $32,143 $45,000 $30,000 none of the above. Flag question: Question 3 Question 33 pts The joint cost allocations to Products X and Y using the constant gross margin percentage method would be: Group of answer choices $42,143…
Calcion Industries produces two joint products, Y and Z. Prior to the split-off point, the company incurred costs of $24,000. Product Y weighs 20 pounds and product Z weighs 80 pounds. Product Y sells for $150 per pound and product Z sells for $125 per pound. Based on a physical measure of output, allocate joint costs to products Y and Z. Product Y allocation ? Product Z allocation ?
Mitchener Corp. manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $440,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. Each product may be sold at the split-off point or processed further. The additional processing costs and sales value after further processing for each product (on an annual basis) are: Product Sales Value at Split-Off Further Processing Costs Sales Value After Further Processing M $110,000 $ 50,000 $175,000 N 170,000 75,000 235,000 P 160,000 45,000 215,000 The "Further Processing Costs" consist of variable and avoidable fixed costs.INSTRUCTIONS Determine which product or products should be sold at the split-off point, and which product or products should be…