Popham Ch. 17 Problems 1 & 2

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Georgia Southern University *

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6010

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Industrial Engineering

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Dec 6, 2023

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Problem 2 Cotton Elle Inc. produces three varieties of cotton, Grade 1, Grade 2, & Grade 3 from a joint processing of the raw cotton. The amount of each product produced in the first quarter of the current year is 80,000 pounds, 50,000 pounds, and 120,000 pounds respectively. The selling price of each product per pound is $5, $7 & $8 respectively. The joint processing cost is $400,000. The separable processing costs for each product is $30,000, $50,000 and $90,000 respectively. Determine the following: volume method, relative sales value method, and net realizable value method. value method. 1. Joint cost allocated to each product (Grade 1, Grade 2, & Grade 3) using the physical 2. The unit cost of each product (Grade 1, Grade 2, & Grade 3) using the net realizable

Using Physical Volume Method Grade 1 128000 Grade 2 80000 Grade 3 192000 Using Relative Sales Method Grade 1 93567.2514619883 Grade 2 81871.3450292398 Grade 3 224561.403508772 Using Net Realizable Sales Value Method Grade 1 96103.8961038961 Grade 2 77922.0779220779 Grade 3 225974.025974026 Unit Cost of each product Grade 1 1.57629875 Grade 2 2.5584416 Grade 3 2.63311683333333

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Problem 1 Samsung has two operating/user departments, Gen 4 & Gen 5. The two support departments are Information Technology (IT) & Product Development (PD). The costs incurred in each of these departments are as follows: Gen 4 $300,000 Gen 5 $480,000 IT $60,000 PD $150,000 The actual level of support is as follows: Supplied by Used by IT PD Gen 4 Gen 5 PD 20% 25% 55% Determine the cost allocated to: 1. Gen 4 using the direct method 2. Gen 5 using the direct method 3. Gen 4 using the step-down method (allocating IT first) 4. Gen 4 using the step-down method (allocating PD first) 5. Gen 4 using the reciprocal method 6. Gen 5 using the reciprocal method

Direct Method IT PD Cost 60,000.00 150,000.00 IT Cost Allocated -60,000.00 PD Cost Allocated -150,000.00 Total Cost Step Method IT PD Cost 60,000.00 150,000.00 IT Cost Allocated -60,000.00 6,000.00 PD Cost Allocated -156,000.00 Total Cost IT PD Cost 60,000.00 150,000.00 PD Cost Allocated 30,000.00 -150,000.00 IT Cost Allocated -90,000.00 Total Cost IT PD Cost 60,000.00 150,000.00 IT Cost Allocated -91,836.72 9,183.67 PD Cost Allocated 31,836.73 -159,183.67 Total Cost 0.01 0

Gen 4 Gen 5 300,000.00 480,000.00 20,000.00 40,000.00 46,875.00 103,125.00 366,875.00 623,125.00 Gen 4 Gen 5 300,000.00 480,000.00 18,000.00 36,000.00 48,750.00 107,250.00 366,750.00 623,250.00 Gen 4 Gen 5 300,000.00 480,000.00 37,500.00 82,500.00 30,000.00 60,000.00 367,500.00 622,500.00 Gen 4 Gen 5 300,000.00 480,000.00 27,551.02 55,102.03 39,795.92 87,551.02 367,346.94 622,653.05

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Popham Ch. 17 Problems 1 & 2

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