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Joint cost allocation —net realizable value method
Nature’s Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,304 cubic yards of wood chips, 14,100 cubic yards of mulch, and 9,024 cubic yards of wood pulp. The joint production
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- Board-It, Inc., produces the following types of 2 4 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of 710 per batch. Using the physical units method, allocate the joint production cost to each product.arrow_forwardJoint 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?arrow_forwardJoint 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.arrow_forward
- 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.arrow_forwardJoint Cost Allocation—Physical Units Method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of $710 per batch. Using the physical units method, allocate the joint production cost to each product. Round your answers to two decimal places. Joint Product Allocation Washed $ Stained Pressure treated Totals $arrow_forwardJoint Cost Allocation—Physical Units Method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of $710 per batch. Using the physical units method, allocate the joint production cost to each product. Round your answers to two decimal places.arrow_forward
- Joint Cost Allocation—Weighted Average Method Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Carving Creations accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 3,000 cubic yards of wood chips and 10,000 cubic yards of sawdust, and the estimated cost per batch is $21,400. However, the joint production of each good is not equally weighted. Management at Carving Creations estimates that for the time it takes to produce 10 cubic yards of wood chips in the joint production process, only 2 cubic yards of sawdust are produced. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust $fill in the blank 1 Wood chips fill in the blank 2 Totals $fill in the blank 3arrow_forwardJoint Cost Allocation—Weighted Average Method Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust Wood chips Totalsarrow_forwardJoint Cost Allocation—Weighted Average Method Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust $fill in the blank 1 Wood chips fill in the blank 2 Totals $fill in the blank 3arrow_forward
- Joint Products Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 5,000 gallons of productA and 1,000 gallons of product B to the split-off point costs $5,600. The sales value at split-off is $2per gallon for product A and $30 per gallon for product B. Product B requires additional separableprocessing beyond the split-off point at a cost of $2.50 per gallon before it can be sold at a price of$34 per gallon.Required What is the company’s cost to produce 1,000 gallons of product B?arrow_forwardJoint Cost Allocation-Market Value at Split-off Method Gripturn Inc. produces two different styles of door handles, standard and curved. The door handles go through a joint production molding process costing $28,000 per batch and producing 2,000 standard door handles and 1,000 curved door handles at the split-off point. Both door handles undergo additional production processes after the split-off point, but could be sold at that point: the standard style for $10 per door handle and the curved style for $5 per door handle. Determine the amount of joint production costs allocated to each style of door handle using the market value at split-off method. Joint Product Standard door handle Curved door handle Totals Feedback Allocationarrow_forwardJoint Cost Allocation—Physical Units Method Medieval Blacksmith Co. produces two types of decorative swords, a broadsword and a longsword. The swords are made through a joint production process that ultimately produces 42 broadswords and 28 longswords and costs a total of $4,200 per batch. After the split-off point, each type of sword goes through an additional crafting process before it is sold. The additional production process of the broadsword costs $42 per sword, after which it is sold for $174 per sword. The additional production process of the longsword costs $28 per sword, after which it is sold for $148 per sword. Determine the amount of joint production costs allocated to each type of sword using the physical units method. Joint Product Allocation Broadsword $fill in the blank 1 Longsword fill in the blank 2 Totals $fill in the blank 3arrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,