Crane's woodworking business produces two products from its joint process: one main product (sanded and finished trim pieces) and one by-product (sawdust/shavings). The joint process has a cost of $31,000, which results in trim pieces worth $47,000 and sawdust/shavings that can be sold for $2,800. If Crane uses the production method to account for by-products, determine how much of the joint process cost will be allocated to each product. In other words, how much inventory cost will be recorded for each product By-product Main product Allocated joint costs $ $

Crane's woodworking business produces two products from its joint process: one main product (sanded and finished trim pieces) and one by-product (sawdust/shavings). The joint process has a cost of $31,000, which results in trim pieces worth $47,000 and sawdust/shavings that can be sold for $2,800. If Crane uses the production method to account for by-products, determine how much of the joint process cost will be allocated to each product. In other words, how much inventory cost will be recorded for each product By-product Main product Allocated joint costs $ $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Pancake Company produces two main products and a by-product out of a joint process. The ratio of output quantities to input quantities of direct materials used in the joint process remains consistent from month to month. Pancake has employed the physical measures method to allocate joint production costs to the two main products. The net realizable value of the by-products is used to reduce the joint production costs before the joint costs are allocated to the main products. Data regarding Pancake's operations for the current month are presented in the table below. During the month, Pancake incurred joint production costs of £2,520,000. The main products are not marketable at the split-off point and, therefore, have to be processed further. First Main Second Product Monthly outputs (kgs) 90,000 I Selling price per kg £30 Separable process costs Required: £540,000 Main Product 150,000 £14 £660,000 By-product 60,000 £2 1. Calculate the net realizable value of the by-product. What is the…
Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $310,000 for a standard production run that generates 180,000 pints of Smooth Skin and 280,000 pints of Silken Skin. Separable processing costs beyond the split-off point are $1.30 per pint for Smooth Skin and $1.80 per pint for Silken Skin. Required: How much of the joint costs are allocated to Smooth Skin and Silken Skin under each of the following methods: 1. Physical quantity method 2. Sales value at split-off method. Assume the following sales prices at the split-off point: Smooth Skin sells for $3.60 per pint, while Silken Skin sells for $5.10 per pint. 3. Net realizable value method. Assume the following sales prices after further processing: Smooth Skin sells for $3.60 per pint, while Silken Skin sells for $5.10 per pint. (For all requirements, do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) 1. Physical…
McKenzie’s 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 that costs $30,000 per batch. Each batch produces 14,800 bottles of morning glory hand soap, 12,000 bottles of snowflake sparkle hand soap, and 10,000 bottles of sea breeze hand soap at the split-off point. Each product is processed further after the split-off point, but the market value of a bottle of any of the flavors at this point is estimated to be $1.25 per bottle. The additional processing costs of morning glory, snowflake sparkle, and sea breeze hand soap are $0.50, $0.55, and $0.60 per bottle, respectively. Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for $2.00, $2.20, and $2.40 per bottle, respectively. 1. Using the net realizable value method, allocate the joint costs of production to each product. 2. Using the Market Value at Split Off Point Method, allocate…
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