Horngren's Cost Accounting, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134476032
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 16, Problem 16.37P
Further processing decision (continuation of 16-36). SW Flour Company has decided that their bread flour may sell better if it was marketed for gourmet baking and sold with infused spices. This would involve additional cost for the spices of $0.80 per cup. Each cup could be sold for $5.50.
- 1. If SW uses the sales value at splitoff method, what combination of products should SW sell to maximize profits?
Required
- 2. If SW uses the physical-measure method, what combination of products should SW sell to maximize profits?
- 3. Explain the effect that the different cost-allocation methods have on the decision to sell the products at splitoff or to process them further.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Holmes Company has already spent $56,000 to harvest peanuts. Those peanuts can be sold as is for $81,500. Alternatively, Holmes can process further into peanut butter at an additional cost of $390,000. If Holmes processes further, the peanut butter can be sold for $660,000.(a) Prepare a sell as is or process further analysis of income effects.(b) Should Holmes sell as is or process further?
(a) Sell or Process Analysis
Sell as is
Process Further
Revenue
Costs
Income
(b) The company should:
Process further
Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of product A and 1000 units of product B, selling price at split off point for A is $30 and for B is $50, if further processing is tool place the selling price of super A is $45 and for super B is $60, additional cost of super A is $20000 and for super B is $30000, your recommendation is further process of A and sell B at split off?
a.
False.
b.
True.
2
Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of product A and 1000 units of product B, selling price at split off point for A is $30 and for B is $50, if further processing is tool place the selling price of super A is $45 and for super B is $60, additional cost of super A is $35000 and for super B is $30000, your recommendation is further process of A and sell B at split off?
a.
True.
b.
False.
3
Alnusairat company is processing Milk with a joint cost of $100000 to produce 2000 units of…
Cobe Company has manufactured 225 partially finished cabinets at a cost of $56,250. These can be sold as is for $67,500. Instead, the cabinets can be stained and fitted with hardware to make finished cabinets. Further processing costs would be $13,500, and the finished cabinets could be sold for $90,000.(a) Prepare a sell as is or process further analysis of income effects.(b) Should the cabinets be sold as is or processed further and then sold?
Chapter 16 Solutions
Horngren's Cost Accounting, Student Value Edition (16th Edition)
Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7QCh. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...
Ch. 16 - Why is the constant gross-margin percentage NRV...Ch. 16 - Managers must decide whether a product should be...Ch. 16 - Prob. 16.13QCh. 16 - Describe two major methods to account for...Ch. 16 - Why might managers seeking a monthly bonus based...Ch. 16 - Prob. 16.16MCQCh. 16 - Joint costs of 8,000 are incurred to process X and...Ch. 16 - Houston Corporation has two products, Astros and...Ch. 16 - Dallas Company produces joint products, TomL and...Ch. 16 - Earls Hurricane Lamp Oil Company produces both A-1...Ch. 16 - Joint-cost allocation, insurance settlement....Ch. 16 - Joint products and byproducts (continuation of...Ch. 16 - Net realizable value method. Sweeney Company is...Ch. 16 - Alternative joint-cost-allocation methods,...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Prob. 16.26ECh. 16 - Joint-cost allocation, sales value, physical...Ch. 16 - Joint-cost allocation: Sell immediately or process...Ch. 16 - Accounting for a main product and a byproduct....Ch. 16 - Joint costs and decision making. Jack Bibby is a...Ch. 16 - Joint costs and byproducts. (W. Crum adapted)...Ch. 16 - Methods of joint-cost allocation, ending...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Comparison of alternative joint-cost-allocation...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Joint-cost allocation. SW Flour Company buys 1...Ch. 16 - Further processing decision (continuation of...Ch. 16 - Joint-cost allocation with a byproduct. The...Ch. 16 - Byproduct-costing journal entries (continuation of...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Prob. 16.41PCh. 16 - Prob. 16.42PCh. 16 - Methods of joint-cost allocation, comprehensive....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?arrow_forwardMarchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?arrow_forwardRalston Dairy gathered this data about the two products that it produces: Ralston Dairy data Product Current Sales Value Estimated Added Processing Costs Sales Value if Processed Further Frozen yogurt $8,000 $2,000 $11,000 Ice cream 12,000 7,000 18,000 A) What is the effect on profit if the frozen yogurt is processed further? If it is negative, use a dash - not parentheses ( ). B) What is the effect on profit if the ice cream is processed further? If it is negative, use a dash - not parentheses ( ).arrow_forward
- Refer to the information for Petoskey Company from Exercise 8-44. Assume that 20% of theAlanson customers choose to buy from Petoskey because it offers a full range of products, including Conway. If Conway were no longer available from Petoskey, these customers would goelsewhere to purchase Alanson.Required:CONCEPTUAL CONNECTION Estimate the impact on profit that would result from droppingConway. Explain why Petoskey should keep or drop Conwayarrow_forwardThe standard price for one dozen pierogis has been $5.99 per dozen. Depending upon the ingredients, the competitors’ prices range from $2.79 to $5.39 per dozen in most grocery stores. A breakdown of the cost structure revealed total variable costs of $1.87/dozen and total fixed costs of $0.20/dozen. Using the target price of $5.99, determine the price point the company should use for the wholesaler. Does this price point allow the company to maintain its desired 45 percent mark-up?arrow_forwardMaking sell or process further decisions NaturalMaid processes organic milk into plain yogurt. NaturalMaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $840, yields 300 gallons of plain yogurt. NaturalMaid sells the one-gallon tubs for $5 each and spends $0.14 for each plastic rub. NaturalMaid has recently begun to reconsider its strategy. NaturalMaid wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. NaturalMaid could further process each batch of plain yogurt into 6,400 individual portions (3/4 cup each) of fruited yogurt. Recent market analysis indicates that demand for the product exists. NaturalMaid would sell each individual portion for $0.58. Packaging would cost $0.10 per portion, and fruit would cost $0.11 per portion. Fixed costs would not change. Should NaruralMaid continues to sell only the gallon-size plain yogurt (sell…arrow_forward
- Making sell or process further decisions NaturalMaid processes organic milk into plain yogurt. NaturalMaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $840, yields 300 gallons of plain yogurt. NaturalMaid sells the one-gallon tubs for $5 each and spends $0.14 for each plastic rub. NaturalMaid has recently begun to reconsider its strategy. NaturalMaid wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. NaturalMaid could further process each batch of plain yogurt into 6,400 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. NaturalMaid would sell each individual portion for $0.58. Packaging would cost $0.10 per portion, and fruit would cost $0.11 per portion. Fixed costs would not change. Should NaruralMaid continue to sell only the gallon-size plain yogurt (sell…arrow_forwardMarketing manager suggests the company should sell CHANTEQ in both states as he is confident the market would be good. However, the direct material cost will increase by 10%. Advise the management on how many units to be sold for both states to maintain its annual profit.arrow_forwardKellogg, maker of Pop-Tarts, recently introduced Pop-Tarts Gone Nutty! The new product includes flavors such as peanut butter and chocolate peanut butter. Although the new Gone Nutty! product will reap a higher wholesale price for the company ($1.20 per eight-count package of the new product versus $1.00 per package for the original product), it also comes with higher variable costs ($0.55 per eight-count package for the new product versus $0.30 per eight-count package for the original product). What brand development strategy is Kellogg undertaking? Assume the company expects to sell 5 million packages of Pop-Tarts Gone Nutty! in the first year after introduction but expects that 80 percent of those sales will come from buyers who would normally purchase existing Pop-Tart flavors (that is, cannibalized sales). Assuming the sales of regular Pop-Tarts are normally 300 million packages per year and that the company will incur an increase in fixed costs of $500,000 during the first…arrow_forward
- A company is providing its product to the consumer through the wholesalers. The managing director of the company thinks that if the company starts selling through retailers or to the consumers directly, it can increase its sales, charge higher prices and make more profit. On the basis of the following information and consider variable cost is rial 2.50 per unit and fixed cost is rial 50000. (a) Advise the managing director whether the company should change its channel of distribution or not (with calculation and Justification). (b) Provide suggestions and recommendations on the basis of analysis.arrow_forwardTo help in the analysis, Kaylin gathered the following data for LLHC for 20X1: Tons sold: 10 Average cartons per shipment: 2 Average shipments per ton: 7 1) Using the new costs computed in Requirement 2, compute the profit per ton of LLHC. Compare this with the profit per ton computed by using the old method. Do you think that this same effect would be realized for other low-volume products? Explain.arrow_forwardThe Monroe Forging Company sells a corrugated steel product to the Standard Manufacturing Company and is in competition on such sales with other suppliers of the Standard Manufacturing Co. The vice president of sales of Monroe Forging Co. believes that by reducing the price of the product, a 40% increase in the volume of units sold to the Standard Manufacturing Co. could be secured. As the manager of the cost and analysis department, you have been asked to analyze the proposal of the vice president and submit your recommendations as to whether it is financially beneficial to the Monroe Forging Co. You are specifically requested to determine the following: (a) Net profit or loss based on the pricing proposal. (b) Unit sales volume under the proposed price that is required to make the same $40,000 profit that is now earned at the current price and unit sales volume. Use the following data in your analysis:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Pricing Decisions; Author: Rutgers Accounting Web;https://www.youtube.com/watch?v=rQHbIVEAOvM;License: Standard Youtube License