Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card
15th Edition
ISBN: 9781337955386
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: Cengage Learning
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Chapter 5, Problem 15E
To determine
Compute the amount of joint production costs allocated to each type of product using the physical unit’s method.
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lowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans can be
converted into 500 pounds of soy meal and 100 gallons of soy oil. This process incurs joint costs of $ 540. At splitoff
point; soy meal can be sold for $4 per pound, and soy ol can be sold for $5 per gallon.
ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $1500. Each
pound of soy cookles can be sold for $6 per pound.
The 100 gallons of soy oil can be packaged at an additional cost of $300 and made into 400 liters of Soyola. Each liter
of Soyola can be sold for $3.
(For each item below write your answers inside the boxes.)
a) What is the total sales value (from both products) at splitoff point? Ans. = $
b) Using sales value at splitoff method, what amount of the joint costs ($ 540) would be allocated to soy meal Ans, = $
C) Using net realizable value method, what amount of the joint costs ($ 540) would be allocated to Soyola?…
Nervana Soy Products (NSP) buys soybeans and processes them into other soy products. Each ton of soybeans that NSP purchases for $350 can be converted for an additional $210 into 650 lbs of soy meal and
100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.32 and soy oil can be sold in bulk for $4.5 per gallon.
NSP can process the 650 pounds of soy meal into 750 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.32 per pound. The 100 gallons of soy oil can be
packaged at a cost of $230 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.15.
Read the requirements.
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.)
Sales value of total production at splitoff…
Scott Grant has just inherited his family’s pecan farm. He estimates that he can produce 10,000 pounds of pecans for approximately $12,500. He can sell the pecans in the shell as they come from the trees for $3.00 per pound. Alternatively, Scott can have the pecans processed further at a cost of $0.35 per pound and sell them as shelled pecans for $4.00.
1. Define joint cost.
2. Define split-off point.
3. Should Scott sell the pecans for $3.00 as they come from the trees or process the pecans further and sell them at $4.00 as shelled pecans? Provide figures to support your conclusion.
Chapter 5 Solutions
Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card
Ch. 5 - Why are support department costs difficult to...Ch. 5 - Why does support department cost allocation matter...Ch. 5 - What are some drawbacks of applying support...Ch. 5 - Why is the diect method of support department cost...Ch. 5 - How does management determine the order in which...Ch. 5 - Are large or small companies more likely to use...Ch. 5 - What is the main difference between the physical...Ch. 5 - When would management most likely use the net...Ch. 5 - What are the two most often used ways of...Ch. 5 - How can support department and joint cost...
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