HORGREN'S COST ACCOUNTING
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ISBN: 9781323676714
Author: Datar
Publisher: PEARSON EDUCATION (COLLEGE)
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Textbook Question
Chapter 16, Problem 16.40P
Joint-cost allocation, process further or sell. Mountainair Construction Company (MCC) crushes boulders to obtain decorative rock, which they sell through various outlets. The process produces three grades of rock, which are viewed as joint products: Red Rock, a high-end decorative rock; White Rock, commonly used for landscaping purposes; and Gravel, used for driveway filler.
For each 2,000 pounds of boulder, MCC produces 400 pounds of Red Rock, 600 pounds of White Rock, and 1,000 pounds of Gravel. Data for August are provided below:
| Red Rock | White Rock | Gravel | |
| Production (pounds) | 8,000 | 12,000 | 20,000 |
| Selling price per pound at split off | $10.00 | $7.00 | $3.50 |
Joint costs are $190,000; there was no beginning or ending inventory. Because the Red Rock is sold at a premium, it is processed further to ensure uniformity of the rocks. The
Required
- 1. Allocate joint costs under each of the four methods. For the physical measure, use pounds of production.
- 2. Mr. Green, the president of MCC, wants to understand which method is best to use. Explain to Mr. Green the basis for each method and its effect on the financial statements. Also provide your recommendation for MCC and a rationale for that recommendation.
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Allocate the joint costs of production to each product using the net realizable value method.
Joint Product
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Wood chips…
Chapter 16 Solutions
HORGREN'S COST ACCOUNTING
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....
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