Soy Products (DSP) buys soybeans and processes them into other soy products. Each ton of soybeans that DSP purchases for $260 can be converted for an additional $170 into 575lbs of soy meal and 140 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.48 and soy oil can be sold in bulk for $4.75 per gallon. DSP can process the 575 pounds of soy meal into 725 pounds of soy cookies at an additional cost of $370.Each pound of soy cookies can be sold for $2.48 per pound. The 140gallons of soy oil can be packaged at a cost of $200 and made into 560quarts of Soyola. Each quart of Soyola can be sold for $1.45. 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 decimal places and joint costs to the nearest dollar.)Cookies/Soyola/Soy MealSoy OilTotalSales value of total production at splitoffWeightingJoint costs allocatedRequirements1. Allocate the joint cost to the cookies and the Soyola using the following:a. Sales value at splitoff methodb. NRV method2. Should DSP have processed each of the products further? What effect doesthe allocation method have on this decision?

Joint cost arises when an organization produces several products and its cost function is not…

Answered: Soy Products (DSP) buys soybeans and…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 9CE: Refer to Cornerstone Exercise 7.7. Assume that Orchard Fresh. Inc., uses the...

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Soy Products (DSP) buys soybeans and processes them into other soy products. Each ton of soybeans that DSP purchases for $260 can be converted for an additional $170 into 575lbs of soy meal and 140 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.48 and soy oil can be sold in bulk for $4.75 per gallon. DSP can process the 575 pounds of soy meal into 725 pounds of soy cookies at an additional cost of $370.

Each pound of soy cookies can be sold for $2.48 per pound. The 140
gallons of soy oil can be packaged at a cost of $200 and made into 560
quarts of Soyola. Each quart of Soyola can be sold for $1.45.

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 decimal places and joint costs to the nearest dollar.)
Cookies/
Soyola/
Soy Meal
Soy Oil
Total
Sales value of total production at splitoff
Weighting
Joint costs allocated
Requirements
1. Allocate the joint cost to the cookies and the Soyola using the following:
a. Sales value at splitoff method
b. NRV method
2. Should DSP have processed each of the products further? What effect does
the allocation method have on this decision?

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