gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.44 and soy oil can be sold in bulk for $4.25 per gallon. OSP can process the 650 pounds of soy meal into 700 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.44 per pound. The 80 gallons of soy oil can be packaged at a cost of $250 and made into 320 quarts of Soyola. Each quart of Soyola can be sold for $1.55. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three c Requirements Cookies/ Soyola/ Soy Meal Soy Oil Total Sales value of total production at splitoff 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method Weighting Joint costs allocated 2. Should OSP have processed each of the products further? What effect does the allocation method have on this decision?

gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.44 and soy oil can be sold in bulk for $4.25 per gallon. OSP can process the 650 pounds of soy meal into 700 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.44 per pound. The 80 gallons of soy oil can be packaged at a cost of $250 and made into 320 quarts of Soyola. Each quart of Soyola can be sold for $1.55. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three c Requirements Cookies/ Soyola/ Soy Meal Soy Oil Total Sales value of total production at splitoff 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method Weighting Joint costs allocated 2. Should OSP have processed each of the products further? What effect does the allocation method have on this decision?

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 11P: Otto Inc. specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery...

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Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52 per case (a case contains 24 cans of nuts). Kaune sold 150,000 cases last year to the following three classes of customer: The supermarkets require special labeling on each can costing 0.04 per can. They order through electronic data interchange (EDI), which costs Kaune about 61,000 annually in operating expenses and depreciation. Kaune delivers the nuts to the stores and stocks them on the shelves. This distribution costs 45,000 per year. The small grocers order in smaller lots that require special picking and packing in the factory; the special handling adds 25 to the cost of each case sold. Sales commissions to the independent jobbers who sell Kaune products to the grocers average 8 percent of sales. Bad debts expense amounts to 9 percent of sales. Convenience stores also require special handling that costs 30 per case. In addition, Kaune is required to co-pay advertising costs with the convenience stores at a cost of 15,000 per year. Frequent stops are made to each convenience store by Kaune delivery trucks at a cost of 30,000 per year. Required: 1. Calculate the total cost per case for each of the three customer classes. (Round unit costs to four significant digits.) 2. Using the costs from Requirement 1, calculate the profit per case per customer class. Does the cost analysis support the charging of different prices? Why or why not? 3. What if Kaune charged the average price per case to all customer classes? How would that affect the profit percentages?
Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio and Maslimpio. Pocolimpio uses two quarts of the chemical for every unit produced, and Maslimpio uses five quarts. Currently, Taylor has 6,000 quarts of the material in inventory. All of the material is imported. For the coming year, Taylor plans to import 6,000 quarts to produce 1,000 units of Pocolimpio and 2,000 units of Maslimpio. The detail of each products unit contribution margin is as follows: Taylor Company has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 6,000 quarts it planned to use in the coming years production. There is no other source of the material. Required: 1. Compute the total contribution margin that the company would earn if it could import the 6,000 quarts of the material. 2. Determine the optimal usage of the companys inventory of 6,000 quarts of the material. Compute the total contribution margin for the product mix that you recommend. 3. Assume that Pocolimpio uses three direct labor hours for every unit produced and that Maslimpio uses two hours. A total of 6,000 direct labor hours is available for the coming year. a. Formulate the linear programming problem faced by Taylor Company. To do so, you must derive mathematical expressions for the objective function and for the materials and labor constraints. b. Solve the linear programming problem using the graphical approach. c. Compute the total contribution margin produced by the optimal mix.
Otto Inc. specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery chains. Chickens are accounted for in batches of 50,000. At the end of each growing period, the chickens are separated and sold by grades. Grades AA and A are sold to large grocery chains, and B and C are sold to other buyers. For costing purposes, Otto treats each batch of chicks as a joint product. The cost data for a batch of 50,000 chicks follow: Total joint costs for the batch were 125,000. Required: Compute the cost allocations for each product, using the sales value at split-off method. (Round sales value percentages to five decimal places.)
Berettis Food Mart has 6,000 pounds of raw pork nearing its expiration date. Each pound has a cost of $5.50. The pork could be sold as is for $2.50 per pound to the dog food processing plant, or it could be made into custom Italian sausage and sold in the meat department. The cost of the sausage making is $3.00 per pound and each pound could be sold for $7.50. What should be done with the pork and why?
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the production of the boxed lunches. The costs to make the cookies are: A potential supplier has offered to sell Country Diner the cookies for $0.85 each. If the cookies are purchased, 10% of the fixed overhead could be avoided. If Jason accepts the offer, what will the effect on profit be?
Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next months sales are in the finished goods inventory. Ingles also purchases sufficient materials to ensure that materials inventory is 60 percent of the following months scheduled production. Ingless sales budget in units for the next quarter is as follows: Ingless ending inventories in units for July 31 are as follows: Required: 1. Calculate the number of tables to be produced during August. 2. Disregarding your response to Requirement 1, assume the required production units for August and September are 2,100 and 1,900, respectively, and the July 31 materials inventory is 4,000 units. Compute the number of table legs to be purchased in August. 3. Assume that Ingles Corporation will produce 2,340 units in September. How many employees will be required for the Assembly Department in September? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.) (CMA adapted)
This year, Hassell Company will ship 4,000,000 pounds of chocolates to customers with total order-filling costs of 900,000. There are two types of customers: those who order 50,000 pound lots (small customers) and those who order 250,000 pound lots (large customers). Each customer category is responsible for buying 1,500,000 pounds. The selling price per pound is 2 per lb for the 50,000 pound lot and 3 per lb for the larger lots, due to differences in the type of chocolate. ABC would likely assign order-filling costs to the customer type as follows: a. 450,000, small; 450,000, large (using pounds as the driver) b. 360,000, small; 540,000, large (using revenue as the driver) c. 750,000, small; 150,000, large (using number of orders as the driver) d. 450,000, small; 450,000, large (using customer type as the driver)
Blakes Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 30 12-gauge shotguns and 20 20-gauge shotguns and costs a total of 4,000 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs 30 per gun, after which it is sold for 180 per gun. The additional production process of the 20-gauge shotgun costs 25 per gun, after which it is sold for 150 per gun. Determine the amount of joint production costs allocated to each type of shotgun using the physical units method.
Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one gallon of consumable milk. Bart’s then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart’s normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (i.e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. What is the contribution to income from processing the consumable milk into butter?
Bart’s Butters receives 1,000,000 containers of raw milk each period that it subsequently processes into consumable milk by adjusting the fat content, adding vitamins, and destroying any potentially harmful bacteria. For Bart’s, one container equals one gallon of consumable milk. Bart’s then must decide whether to sell its consumable milk at split-off or to process it further into butter. Bart’s normally sells consumable milk for a per-gallon price of $3. Alternately, each gallon of milk can be processed further into one-half tub of butter (i.e., one gallon of milk equals 0.5 gallon of butter) at an additional cost of $1.50 per tub of butter. Also, butter can be sold for $6.00 per tub. Required: 1. What is the contribution to income from selling the consumable milk?$fill in the blank 1 2. What is the contribution to income from processing the consumable milk into butter?$fill in the blank 2
M & Z Creameries, Corp. process milk and sugar to make vanilla ice cream. They sell their ice cream in large one-gallon containers to schools, hospitals, nursing homes, and restaurants. Each batch produces 1,700 gallons of ice cream at a cost of $840 per batch. M & Z Creameries, Corp. sells the one-gallon containers for $23.00 each and spends $0.35 for each plastic container. M & Z Creameries, Corp. has started to determine the feasibility of adding chocolate and strawberries and sell pint-size portions at local supermarkets.Further processing of each batch of ice cream could produce 24,400 pint-sized portions. A recent market study determined a demand existed for this type of product. M & Z Creameries, Corp. could sell each pint-sized portion for $2.70. Additional packaging would cost $0.30 per pint, and the additional materials would cost $0.25 per pint. There would be no change in fixed costs.Should they continue to sell only one-gallon size containers of vanilla ice…