Question Content Area McBride’s Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It also incorporates a processing time weight factor of 1 for the cream and 3 for the skimmed milk. The amount of this cost that will be allocated to cream using the weighted average method is a. $900 b. $1,000 c. $250 d. $100
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Question Content Area
McBride’s Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It also incorporates a processing time weight factor of 1 for the cream and 3 for the skimmed milk. The amount of this cost that will be allocated to cream using the weighted average method is
a. $900b. $1,000c. $250d. $100
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- Question Content Area Special Order, Traditional Analysis Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $91,600 for a standard production run that generates 32,400 gallons of Refined Oil and 16,200 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.50 per gallon for Refined Oil and $1.80 per gallon for Top Quality Oil. Refined Oil sells for $4.30 per gallon, while Top Quality Oil sells for $8.30 per gallon. MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 32,400 gallons of Top Quality Oil at a price of $8.1 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.26 per gallon in packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated,…(Physical measure joint cost allocation) Powisett Farms Dairy began opera-tions at the start of May 2010. Powisett Farms operates a fl eet of trucks to gather whole milk from local farmers. The whole milk is then separated into two joint products: skim milk and cream. Both products are sold at the split-off point to dairy wholesalers. For May, the firm incurred the following joint costs:Whole milk purchase cost $400,000Direct labor costs 180,000Overhead costs 292,000Total product cost $872,000During May, the fi rm processed 2,000,000 gallons of whole milk, producing 1,555,500 gallons of skim milk and 274,500 gallons of cream. The remaining gallons of the whole milk were lost during processing. There was no Raw Material or Work in Process Inventory at the end of May.After the joint process, the skim milk and cream were separately processed at costs,respectively, of $67,660 and $83,310. Of the products produced, Powisett Farms Dairy sold 1,550,000 gallons of skim milk for $1,472,500 and…(Physical measure joint cost allocation) Powisett Farms Dairy began opera-tions at the start of May 2010. Powisett Farms operates a fleet of trucks to gather whole milk from local farmers. The whole milk is then separated into two joint products: skim milk and cream. Both products are sold at the split-off point to dairy wholesalers. For May, the firm incurred the following joint costs:Whole milk purchase cost $400,000Direct labor costs 180,000Overhead costs 292,000Total product cost $872,000During May, the firm processed 2,000,000 gallons of whole milk, producing 1,555,500 gallons of skim milk and 274,500 gallons of cream. The remaining gallons of the whole milk were lost during processing. There was no Raw Material or Work in Process Inventory at the end of May.After the joint process, the skim milk and cream were separately processed at costs, respectively, of $67,660 and $83,310. Of the products produced, Powisett Farms Dairy sold 1,550,000 gallons of skim milk for $1,472,500 and…
- Question 10SW Flour Company buys whole wheat flour and mills it into Bread Flour and All-Purpose White Flour (APWF). SW bought 300,000 pounds of whole wheat flour for $70,000. SW spent an additional $50,000 to process the whole wheat flour into Bread Flour and All-Purpose White Flour, so total joint costs equal $120,000. SW Flour Company reported the following production and sales information: Bread Flour APWF Production and sales (in pounds) 60,000 240,000 Selling price per pound $0.85 $0.50 SW can also put the All-Purpose White Flour through a second process and convert it into Cake Flour. This process costs an additional $35,000 but 20,000 pounds of flour are lost and thus yields only 220,000 pounds of Cake Flour. The Cake Flour sells for $1 per pound. What would be the amount of the joint costs allocated to Cake Flour using the…13. McBride’s Dairy has 200 gallons of heavy cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. It can sell each product at the split-off point or process it further in relatively similar processes, so management has decided that the most appropriate method for allocating joint costs is the market value at split-off point. One gallon of cream sells for $15, while one gallon of milk sells for $4. How much of the joint cost is allocated to skimmed milk? Round percentage calculations to the nearest whole percent. a. $1,000 b. $560 c. $440 d. $0Relevant costs for decision making Cipla Uganda pharmaceutical company, buys a chemical for $10,000, which it breaks down into two components: Component Sales value ($) Allocated costs ($) A 8,000 7,000 B 4,000 5,000 Component A can be converted into Product A if $6,000 is spent on further processing. Product A would sell for $12,000. Component B can be converted into Product B if $10,000 is spent on further processing. Product B would sell for $17,000. Required; What processing decision should Cipla make in order to maximize profits? Illustrate the production plan to show the contribution margin.
- Product Mix Decision, Single Constraint Norton Company produces two products (Juno and Hera) that use the same material input. Juno uses two pounds of the material for every unit produced, and Hera uses five pounds. Currently, Norton has 16,000 pounds of the material in inventory. All of the material is imported. For the coming year, Norton plans to import an additional 8,000 pounds to produce 2,000 units of Juno and 4,000 units of Hera. The unit contribution margin is 30 for Juno and 60 for Hera. Also, assume that Nortons marketing department estimates that the company can sell a maximum of 2,000 units of Juno and 4,000 units of Hera. Norton 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 8,000 pounds 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 manufacture 2,000 units of Juno and 4,000 units of Hera. 2. Determine the optimal usage of the companys inventory of 16,000 pounds of the material. Compute the total contribution margin for the product mix that you recommend.Joint cost allocation Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of 250 per batch. At the split-off point, one batchproduces 80, 40, and 25 bottles of hand, body, and foot lotion, respectively. After the split-off point,hand lotion is sold immediately for 2.50 per bottle. Body lotion is processed further at an additional cost of 0.25 per bottle and then sold for 5.75 per bottle. Foot lotion is processed further atan additional cost of 0.85 per bottle and then sold for 4.00 per bottle. Assume that body and footlotion could be sold at the split-off point for 3.00 and 3.20 per bottle, respectively. Instructions 1. Using the market value at split-off method, allocate the joint costs of production to each product. 2. Based on the information provided and your answer to part (1), should Lovely LotionInc. continue processing body and foot lotion after the split-off point? 3. Allocate the joint costs of production to each product using the net realizable value method.Refer to Cornerstone Exercise 7.7. Assume that Orchard Fresh, Inc., uses the weighted average method of joint cost allocation and has assigned the following weights to the four grades of apples: Total joint cost is 18,000. Required: 1. Allocate the joint cost to the four grades of apples using the weighted average method. (Carry out the percent calculations to four significant digits. Round all cost allocations to the nearest dollar.) 2. What if the factory found that Grade A apples were being valued less by customers and decided to decrease the weight factor for Grade A apples to 3.0? How would that affect the allocation of cost to Grade A apples? How would it affect the allocation of cost to the remaining grades?
- Joint cost allocation-market value at split-off method Toil Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of 112,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows: Using the market value at split-off method, allocate the 12,000 joint cost of production to each product.Joint cost allocation McKenzies Soap Sensations, Inc., produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process thatcosts 30,000 per batch. Each batch produces 14,800 bottles of morning glory hand soap, 12,000bottles of snowflake sparkle hand soap, and 10,000 bottles of sea breeze hand soap at the split-offpoint. Each product is processed further after the split-off point, but the market value of a bottle ofany of the flavors at this point is estimated to be 1.25 per bottle. The additional processing costsof morning glory, snowflake sparkle, and sea breeze hand soap are 10.50, 0.55, and 0.60 perbottle, respectively. Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for2.00, 2.20, and 2.40 per bottle, respectively. Instructions 1. Using the net realizable value method, allocate the joint costs of production to each product. 2. Explain why McKenzies Soap Sensations, Inc., always chooses to process each varietyof hand soap beyond the split-off point. 3. If demand for all products was the same, which product should McKenzies Soap Sensations, Inc., produce in the highest quantity?Refer to Cornerstone Exercise 7.7. Assume that Orchard Fresh. Inc., uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of apples: Total joint cost is 18,000. Required: 1. Allocate the joint cost to the four grades of apples using the sales-value-at-split-off method. (Carry out the percent calculations to four significant digits. Round all cost allocations to the nearest dollar.) 2. What if the price at split-off of Grade B apples increased to 1.20 per pound? How would that affect the allocation of cost to Grade B apples? How would it affect the allocation of cost to the remaining grades?
