Clover Dairy Products Corp. buys one input of full-cream milk, and refines it in a churning process. From each gallon of milk Clover produces three cups of butter and nine cups of buttermilk. During May 2017, Clover bought 12,000 gallons of milk for $44,500. Clover spent another $18,860 on the churning process to separate the milk into butter and buttermilk. Butter could be sold immediately for $4.40 per pound and buttermilk could be sold immediately for $2.40 per quart (note: two cups = one pound; four cups = one quart). Clover chooses to process the butter further into spreadable butter by mixing it with canola oil, incurring an additional cost of $3.20 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $4.60 Required: Allocate the $63,360 joint cost to the spreadable butter and the buttermilk using the following: Physical-measure method (using cups) of joint cost allocation Sales value at splitoff method of joint cost allocatio
Clover Dairy Products Corp. buys one input of full-cream milk, and refines it in a churning process. From each gallon of milk Clover produces three cups of butter and nine cups of buttermilk. During May 2017, Clover bought 12,000 gallons of milk for $44,500. Clover spent another $18,860 on the churning process to separate the milk into butter and buttermilk. Butter could be sold immediately for $4.40 per pound and buttermilk could be sold immediately for $2.40 per quart (note: two cups = one pound; four cups = one quart). Clover chooses to process the butter further into spreadable butter by mixing it with canola oil, incurring an additional cost of $3.20 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $4.60 Required: Allocate the $63,360 joint cost to the spreadable butter and the buttermilk using the following: Physical-measure method (using cups) of joint cost allocation Sales value at splitoff method of joint cost allocatio
Chapter1: Financial Statements And Business Decisions
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Question 1
Clover Dairy Products Corp. buys one input of full-cream milk, and refines it in a churning process. From each gallon of milk Clover produces three cups of butter and nine cups of buttermilk. During May 2017, Clover bought 12,000 gallons of milk for $44,500. Clover spent another $18,860 on the churning process to separate the milk into butter and buttermilk. Butter could be sold immediately for $4.40 per pound and buttermilk could be sold immediately for $2.40 per quart (note: two cups = one pound; four cups = one quart). Clover chooses to process the butter further into spreadable butter by mixing it with canola oil, incurring an additional cost of $3.20 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $4.60
Required:
- Allocate the $63,360 joint cost to the spreadable butter and the buttermilk using the following:
- Physical-measure method (using cups) of joint cost allocation
- Sales value at splitoff method of joint cost allocation
- NRV method of joint cost allocation
- Constant gross margin percentage NRV method of joint cost allocation
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