Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 3MAD
a.
To determine
Identify the flavors Company J should discontinue to further process after the split-off.
b.
To determine
Identify the flavor the Company J should keep apart from pure orange flavor.
c.
To determine
Compute the amount of joint production costs allocated to each product using the net realization value method.
d.
To determine
Identify how Company J could record the revenue from the sale of the by-product.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Analyze El Pollo Loco Holdings, Inc.
El Pollo Loco Holdings, Inc. (LOCO), Spanish for “The Crazy Chicken,” operates almost 500 restaurants, approximately 40% of which are company-owned and the rest are franchises. El Pollo Loco combines the culinary traditions of Mexico and California, creating unique menu items such as their signature Chicken Avocado Burrito. The company aims to improve profitability, in part, by simplifying operations to make it easier for employees and franchisees to run the restaurants. Recent data (in millions) for company-operated and franchised restaurants are as follows:
Line Item Description
Company-Operated
Franchised
Revenues
$374
$29
Operating income
62
1
Invested assets
79
2
a. Determine the profit margin for each segment. Round to one decimal place.
Line Item Description
Profit margin
Company-Operated
fill in the blank 1%
Franchised
fill in the blank 2%
b. Determine the investment turnover for each segment. Round to two decimal…
The Alfredo Fragrance Company produces only one product, a perfume called Hint of Elegance. Hint of Elegance consists of two secret ingredients blended into an exclusive fragrance, which is marketed in Zurich. An economic expression referred to as the Cobb-Douglas function describes the production of Hint of Elegance as follows:
Where X is the amount of perfume produced.
The company operates at a level where ingredient 1 is set daily at 25 units and ingredient 2 at 36 units. Although the price Alfredo pays for ingredient 1 is fixed at $50 per unit, the cost of ingredient 2 and the selling price for the final perfume are both probabilistic. The sales price for Hint of Elegance follows this distribution:
SALES PRICE ($)
PROBABILITY
300
0.2
350
0.5
400
0.3
The cost for ingredient 2 is
Ingredient 2 Cost ($)
Probability
35
0.1
40
0.6
45
0.3
(a) What is the profit equation for Alfredo Fragrance Company?
Cran Health Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into cranberry juice by the processing division, and the juice is sold to large beverage companies that produce cranberry juice blends. The processing division has a yield of 500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for the two divisions are as follows:
Q.Compute Cran Health’s operating income from harvesting 480,000 pounds of cranberries during June 2017 and processing them into juice.
Chapter 19 Solutions
Financial And Managerial Accounting
Ch. 19 - Why are support department costs difficult to...Ch. 19 - Why does support department cost allocation matter...Ch. 19 - What are some drawbacks of applying support...Ch. 19 - Why is the diect method of support department cost...Ch. 19 - How does management determine the order in which...Ch. 19 - Are large or small companies more likely to use...Ch. 19 - What is the main difference between the physical...Ch. 19 - When would management most likely use the net...Ch. 19 - What are the two most often used ways of...Ch. 19 - How can support department and joint cost...
Ch. 19 - Charlies Wood Works produces wood products (e.g.,...Ch. 19 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 19 - Brewster Toymakers Inc. produces toys for...Ch. 19 - Prob. 4BECh. 19 - Garys Grooves Co. produces two types of carving...Ch. 19 - Man OFort Inc. produces two different styles of...Ch. 19 - Yo-Down Inc. produces yogurt. Information related...Ch. 19 - Snowy River Stallion Inc. produces horse and...Ch. 19 - Blue Africa Inc. produces laptops and desktop...Ch. 19 - Christmas Timber, Inc., produces Christmas trees....Ch. 19 - Crystal Scarves Co. produces winter scarves. The...Ch. 19 - Davis Snowflake Co. produces Christmas stockings...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Support department cost allocation comparison...Ch. 19 - Board-It, Inc., produces the following types of 2 ...Ch. 19 - Prob. 12ECh. 19 - Joint cost allocation market value at split-off...Ch. 19 - Joint cost allocation net realizable value method...Ch. 19 - Big Als Inc. produces and sells various cuts of...Ch. 19 - Gordons Smoothie Stand makes three types of...Ch. 19 - Joint cost allocation-market value at split-off...Ch. 19 - Joint cost allocation net realizable value method...Ch. 19 - Support department cost allocation Blue Mountain...Ch. 19 - Support activity cost allocation Jakes Gems mines...Ch. 19 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 19 - Joint cost allocation Florissas Flowers jointly...Ch. 19 - Support department cost allocation Hooligan...Ch. 19 - Support activity cost allocation Kizzles Crepes...Ch. 19 - Joint cost allocation McKenzies Soap Sensations,...Ch. 19 - Joint cost allocation Rosies Roses produces three...Ch. 19 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 19 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 19 - Prob. 3MADCh. 19 - Analyze Williams Ball Jersey Shop Williams Ball ...Ch. 19 - Prob. 1TIFCh. 19 - Prob. 3TIFCh. 19 - Logo Inc. has two data services departments...Ch. 19 - Adam Corporation manufactures computer tables and...Ch. 19 - Breegle Company produces three products (B-40,...Ch. 19 - Tucariz Company processes Duo into two joint...
Knowledge Booster
Similar questions
- MARKETING: Kroger, the country's leading grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade-A eggs at Kroger costs consumers $1.61.6, whereas Simple Truth eggs are priced at $3.43.4 per dozen. One study found that, overall, the average price of organic foods is 85 percent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally-farmed eggs are $1 million per year, but an organic egg farmer's fixed costs are threethree times that amount. Further assume that the organic farmer's variable costs of…arrow_forwardCran Health Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into cranberry juice by the processing division, and the juice is sold to large beverage companies that produce cranberry juice blends. The processing division has a yield of 500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for the two divisions are as follows: Assume that Pat Borges, CEO of Cran Health, had mandated a transfer price equal to 225% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the following: “Effective immediately, each division of Cran Health is free to make its own decisions regarding the purchase of direct materials and the sale of finished products.” Q. Borges feels that a dual transfer-pricing policy will improve goal congruence. He suggests that transfers out of the harvesting division be made at…arrow_forwardn 2010, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or micro-batch strategy to the production and sale of frozen yoghurt. (The reader may recall that we introducedthis yoghurt venture in the problems section at the end of Chapter 2.) Jen and Larry began producing small quantities of unique flavours and blends in limited editions. Revenues were $600,000 in 2010 and were estimated to be $1.2 million in 2011.Because Jen and Larry were selling premium frozen yoghurt containing premium ingredients, each small cup of yoghurt sold for$3, and the cost of producing the frozen yoghurt averaged $1.50 per cup. Administrative expenses, including Jen and Larry’s salaryand expenses for an accountant and two other administrative staff, were estimated at $180,000 in 2011. Marketing expenses,largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected…arrow_forward
- Zoom kitchen, a chain of four restaurants in the Chicago area, is known for serving sizable portions of meat and potatoes. During the past four years salad sales have increased from 18% of its sales mix to 40%. This hass pleased company management because the contribution margin on salads is much higher than on meat. Why do you suppose restaurants are so eager to sell beverages and desserts?arrow_forward1. In 2013, Jen Liu and Larry Mestas founded Jan and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $ 600,000 in 2013 and were estimated to be $ 1.2 million in 2014. Each small cup of yogurt sold for $ 3, and the cost of producing the frozen yogurt averaged $ 1.5 per cup. Administrative expenses, including Jen and Larry’s salary and expenses for an accountant and two other administrative staff, were estimated at $ 180,000 in 2014. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be $ 200,000 in 2014. An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in lower downtown occurred…arrow_forwardMARKETING: Kroger, the country's leading grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade-A eggs at Kroger costs consumers $1.501.50, whereas Simple Truth eggs are priced at $3.453.45 per dozen. One study found that, overall, the average price of organic foods is 85 percent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally-farmed eggs are $1 million per year, but an organic egg farmer's fixed costs are fourfour times that amount. Further assume that the organic farmer's variable costs of…arrow_forward
- Krispy Kreme Doughnuts, Inc. (KKD) is a leading retailer and wholesaler of doughnuts. Krispy Kreme owns or franchises more than 1,100 stores where the “hot" light tells you if doughnuts are cooking. Dunkin* Brands Group, Inc. (DNKN) is a leading franchisor of doughnut (Dunkin' Donuts) and ice cream (Baskin-Robbins) shops with more than 20,000 stores worldwide. Selected financial statement information for a recent year for both companies follows (in thousands): a. Determine the days' cash on hand for each company. Round all calculations to one decimal place.b. Which company appears to have the stronger cash liquidity position?arrow_forwardI need help with parts 3 and 4. See attachements below for template. Sunblessed Juice Company sells bags of oranges and cartons of orange juice. Sunblessed grades oranges on a scale of 1 (poor) to 10 (excellent). At present, Sunblessed has 100,000 pounds of grade 9 oranges and 120,000 pounds of grade 6 oranges on hand. The average quality of oranges sold in bags must be at least 7, and the average quality of the oranges used to produce orange juice must be at least 8. Each pound of oranges that is used for juice yields a revenue of $1.50 and incurs a variable cost (consisting of labor costs, variable overhead costs, inventory costs, and so on) of $1.05. Each pound of oranges sold in bags yields a revenue of $1.50 and incurs a variable cost of $0.70. Determine how Sunblessed can maximize its profit. Use SolverTable to determine how a change in the cost per bag of oranges changes the optimal solution. Use SolverTable to determine how a change in the amount of grade 9 oranges available…arrow_forwardHeavenly Chocolates manufactures and sells quality chocolate products at its plant and retail store located in Saratoga Springs, New York. Two years ago, the company developed a web site and began selling its products over the Internet. Web-site sales have exceeded the company’s expectations, and management is now considering strategies to increase sales even further. To learn more about the web-site customers, a sample of 50 Heavenly Chocolate transactions was selected from the previous month’s sales. Data showing the day of the week each transaction was made, the type of browser the customer used, the time spent on the web site, the number of web pages viewed, and the amount spent by each of the 50 customers are contained in the file named Heavenly Chocolates. A portion of the data is shown in the table that follows: Heavenly Chocolates would like to use the sample data to determine whether online shoppers who spend more time and view more pages also spend more money during their visit to the web site. The company would also like to investigate the effect that the day of the week and the type of browser have on sales. Managerial Report Use the methods of descriptive statistics to learn about the customers who visit the Heavenly Chocolates web site. Include the following in your report. Graphical and numerical summaries for the length of time the shopper spends on the web site, the number of pages viewed, and the mean amount spent per transaction. Discuss what you learn about Heavenly Chocolates’ online shoppers from these numerical summaries. Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. Discuss the observations you can make about Heavenly Chocolates’ business based on the day of the week? Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each type of browser. Discuss the observations you can make about Heavenly Chocolates’ business based on the type of browser? Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the dollar amount spent. Use the horizontal axis for the time spent on the web site. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the number of web pages viewed and the amount spent. Use the horizontal axis for the number of web pages viewed. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the number of pages viewed. Use the horizontal axis to represent the number of pages viewed. Discuss your findings.arrow_forward
- The Atlantic Seafood Company (ASC) is a buyer and distributor of seafood products that are sold to restaurants and specialty seafood outlets throughout the Northeast. ASC has a frozen storage facility in New York City that serves as the primary distribution point for all products. One of the ASC products is frozen large black tiger shrimp, which are sized at 16 to 20 pieces per pound. Each Saturday, ASC can purchase more tiger shrimp or sell the tiger shrimp at the existing New York City warehouse market price. ASCs goal is to buy tiger shrimp at a low weekly price and sell it later at a higher price. ASC currently has 20,000 pounds of tiger shrimp in storage. Space is available to store a maximum of 100,000 pounds of tiger shrimp each week. In addition, ASC developed the following estimates of tiger shrimp prices for the next four weeks: ASC would like to determine the optimal buying/storing/selling strategy for the next four weeks. The cost to store a pound of shrimp for one week is 0.15, and to account for unforeseen changes in supply or demand, management also indicated that 25,000 pounds of tiger shrimp must be in storage at the end of week 4. Determine the optimal buying/storing/selling strategy for ASC. What is the projected four-week profit? (Hint: Define variables for buying, selling, and inventory held in each week. Then use a constraint to define the relationship between these: inventory from end of previous period + bought this period sold this period = inventory at end of this period. This type of constraint is referred to as an inventory balance constraint.)arrow_forwardThe Product: The Company’s only product is soft cookies, of which it makes over 50 varieties. Larger companies such as Nabisco, Sunshine and Keebler, have traditionally produced biscuit cookies, in which most of the waster has been baked out, resulting in crisp cookies. The cookies have no additives or preservatives. The high quality of the cookies has enabled the Company to develop a strong market niche for its product. The Customers: The cookies are sold in convenience stores and supermarkets throughout New York, Connecticut and New Jersey. The Company markets its cookies as “good food” – no additives or preservatives – and this appeals to health-conscious segment of the market. Many customers are over 45 years of age, and prefer a cookie that is soft and not too sweet. Parents with young children also buy the cookies. The Production Process: The Company has two continuous band ovens that it uses to bake the cookies. The production process is called a batch processing…arrow_forwardMishal LLC is a new startup in the retail manufacturing business of fruit juices. Their requirement for such business includes fruit pulp, preservatives, natural color and sugar. Annual requirement for fruit pulp is 1000 kg and for preservatives is 20 kg. Semi-annual requirement for natural color is 10 kg and monthly requirement of sugar is 50 kg. Carrying cost for all items is 8%. Buying cost per order for fruit pulp, preservatives, natural color and sugar is RO 10, RO 5, RO 3 and RO 1 respectively. Per unit cost for fruit pulp, preservatives, natural color and sugar is RO 1, RO 1.5, RO 1.2 and RO 0.2 respectively. For preservative, the Seller offers to give 10 % discount on unit price if quantity ordered is 50. What will be the ordering cost if seller option is considered a. 1 b. 5 c. 8 d. 2 What is the cost on material for preservative a. 6.8989 b. 40 c. 10.444 d. 4.8989 For natural color, the Seller offers to give 100 baisa discount on unit price if quantity ordered is 40. What…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning 
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning