Carina Company produces sanitation products after processing specialized chemicals; Thefollowing relates to its activities: 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 isprocessed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, agram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre.2. At an additional cost of $400, Carina can process the 400 grams of Crystal into 500grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent ispackaged at an additional cost of $300 and made into 200 packs of Softener that canbe sold for $2 per pack.Required:1. Allocate the joint cost to the Detergent and the Softener using the following:a. Sales value at split-off method b. NRV method 2. Should Carina have processed each of the products further? What effect does the allocationmethod have on this decision?

Carina Company produces sanitation products after processing specialized chemicals; Thefollowing relates to its activities: 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 isprocessed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, agram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre.2. At an additional cost of $400, Carina can process the 400 grams of Crystal into 500grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent ispackaged at an additional cost of $300 and made into 200 packs of Softener that canbe sold for $2 per pack.Required:1. Allocate the joint cost to the Detergent and the Softener using the following:a. Sales value at split-off method b. NRV method 2. Should Carina have processed each of the products further? What effect does the allocationmethod have on this decision?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 23M

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Carina Company produces sanitation products after processing specialized chemicals; Thefollowing relates to its activities: 1 Kilogram of chemicals purchased for $2000 and with an additional $1000 isprocessed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, agram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre. At an additional cost of $400, Carina can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack. Required: 1. Allocate the joint cost to the Detergent and the Softener using the following: a. Sales value at split-off method b. NRV method 2. Should Carina have processed each of the products further? What effect does the allocationmethod have on this decision? Make full references to Question 1 when possible
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Should Caribu have processed each of the products further? What effect does the allocation method have on this decision?
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $73,000, and the result is 5,900 gallons of anderine and 8,200 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $12.00 per gallon and the dofinol for $6.30 per gallon. Alternatively, the anderine can be processed further at a cost of $7.90 per gallon (of anderine) into cermine. It takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $65.
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $74,000, and the result is 6,000 gallons of anderine and 8,000 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $11 per gallon and the dofinol for $6.75 per gallon. Alternatively, the anderine can be processed further at a cost of $8 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $60. Required: 1. Which alternative is more cost effective and by how much? Process it further by $fill in the blank 2 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 500 gallons of anderine that undergo further processing require 20 more purchase orders at $10 each and 15 more quality inspection hours at…
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $70,500, and the result is 5,600 gallons of anderine and 8,300 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $10.00 per gallon and the dofinol for $6.95 per gallon. Alternatively, the anderine can be processed further at a cost of $7.30 per gallon (of anderine) into cermine. It takes 4 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $61. 1. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 520 gallons of anderine that undergo further processing require 18 more purchase orders at $12 each and 16 more quality inspection hours at $22 each. Which alternative would be better and by how much?NOTE: Round interim calculations and your…
North Co manufactures a powerful cleaning solvent. The main ingredient in the solvent is a raw material called Echol. Information concerning the purchase and use of Echol follows: Purchase of Echol. Echol is purchased in 20-quart containers at a cost of $50 per container. A discount of 4% is offered by the supplier for payment within 10 days, and North Co takes all discounts. Shipping costs, which North Co must pay, amount to $400 for an average shipment of 100 20-quart containers of Echol. Use of Echol. The bill of materials calls for 18.0 quarts of Echol per bottle of cleaning solvent. About 10% of all Echol used is lost through spillage or evaporation (the 18.0 quarts above is the actual content per bottle). In addition, statistical analysis has shown that every 51st bottle is rejected at final inspection because of contamination. Please make sure your final answer(s) are accurate to 2 decimal places. a) Compute the standard purchase price for one quart of Echol. Standard purchase…
Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20.00 per pound and the flakes for $16.00 per pound. On average, 100 pounds of lobster are processed into 59 pounds of tails and 27 pounds of flakes, with 14 pounds of waste. Assume that the company purchased 3,400 pounds of lobster for $4 per pound and processed the lobsters with an additional labor cost of $8,000. No materials or labor costs are assigned to the waste. If 1,858 pounds of tails and 829 pounds of flakes are sold, calculate the allocated cost of the sold items and the allocated cost of the ending inventory. The company allocates joint costs on a value basis. (Round your answers to nearest whole number. Round cost per pound answers to 2 decimal places.)
Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals: dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallonsof dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned about a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon. Should Autry process dac further? a. No, income will decrease by $1,500. b. No, income will decrease by $5,000. c. Yes, income will increase by $1,500. d. Yes, income will increase by $5,000. e. It doesn't matter; income will be the same.
Martin Company manufactures a powerful cleaning solvent. The main ingredient in the solvent is a rawmaterial called Echol. Information concerning the purchase and use of Echol follows:Purchase of Echol Echol is purchased in 15-gallon containers at a cost of $115 per container. A discount of2% is offered by the supplier for payment within 10 days, and Martin Company takes all discounts. Shipping costs, which Martin Company must pay, amount to $130 for an average shipment of 100 15-galloncontainers of Echol.Use of Echol The bill of materials calls for 7.6 quarts of Echol per bottle of cleaning solvent. (Each galloncontains four quarts.) About 5% of all Echol used is lost through spillage or evaporation (the 7.6 quartsabove is the actual content per bottle). In addition, statistical analysis has shown that every 41st bottle isrejected at final inspection because of contamination.Required:1. Compute the standard purchase price for one quart of Echol.2. Compute the standard quantity of…
Filtration, Inc. manufactures filters for use in secondary water irrigation systems. The costs per unit, for 20,000 filters, are as follows. Direct materials $8.00 Direct labor 9.00 Variable overhead 1.00 Fixed overhead 2.00 Total costs $20.00 Irrigation Products has offered to sell 20,000 filters to Filtration for $20 per filter. If Filtration accepts Irrigation Products’ offer, the facilities used to manufacture filters could be used to produce refrigerator filtration units. Revenues from the sale of refrigerator filtration units are estimated at $57,000, with variable costs amounting to 50% of sales. In addition, $1 per unit of the fixed overhead associated with the manufacture of secondary water irrigation filters could be eliminated. Compute the following: Cost to make filters Answer Cost to buy filters Answer Should Filtration, Inc. accept Irrigation Product’s offer? Yes, the cost to purchase the filters is less than the cost to make them.…
Ansel Company manufactures liquid chemicals X and Y from a joint process. Joint costs are allocated on the basis of relative market value at split-off. It costs Php5,000 to process 500 gallons of Product X and 1,000 gallons of Product Y to the split-off point. The market value at split-off is Php10 per gallon for Product X and Php15 for Product Y. Product Y requires an additional process beyond split-off at a cost of Php5 per gallon before it can be sold. What is Ansel Company's cost to produce 1,000 gallons of Product Y?