Crispy, Inc. is a producer of potato chips. A single production process at Crispy, Inc., yields potato chips asthe main product, as well as a byproduct that can be sold as a snack. Both products are fully processed bythe splitoff point, and there are no separable costs. For September 2020, the cost of operations is $520,000.Production and sales data are as follows:(Click the icon to view the production and sales data.)Data tablePotato ChipsByproductProduction (in pounds) Sales (in pounds)46,0008,200Deduct value of byproduct productionPrint34,960 $5,000 $DoneSelling Price per pound265XThere were no beginning inventories on September 1, 2020.Read the requirements.Requirements1. What is the gross margin for Crispy, Inc., under the production method and thesales method of byproduct accounting?2. What are the inventory costs reported in the balance sheet on September 30,2020, for the main product and byproduct under the two methods of byproductaccounting in requirement 1?3. Prepare the journal entries to record the byproduct activities under (a) theproduction method and (b) the sales method. Briefly discuss the effects on thefinancial statements.PrintDone-

Joint products are the products which are produced simultaneously, with the same raw material and…

Answered: Crispy, Inc. is a producer of potato…

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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Renke Inc. is in the corn-milling industry but to date has had only enough manufacturing space for one joint process. Renke refers to its two products as prime products and by-products. There is a market for both products, but, as the names imply, the prime products are what Renke got into business to sell, as the prime products' sales price far exceeds that of the by-products. In a typical production run, which costs $60,000, Renke Inc. produces the following products, which can be sold at the prices shown. Prime products By-products Quantity Produced 1,625 tons 875 tons Sales Price per Ton $50 $5 Because Renke's customers (the corn processors) count on purchasing top-quality raw material from Renke, it is important that the company maintains a steady amount of inventory. For this reason, Renke never completely sells out of its products. For the current production run, managers plan to sell 80% of each product immediately, holding 20% in inventory to carry into the next period.
he production cost information for Blossom's Salsa is as follows: Blossom's Salsa Production Costs April 2020 Production 23,000 Jars of Salsa Ingredient cost (variable) $13, 800 Labor cost (variable ) 9,660 Rent (fixed) 4, 300 Depreciation (fixed) 6,000 Other (fixed) 1,400 Total $35, 160 The company is currently producing and selling 345,000 jars of salsa annually. The jars sell for $7.00 each. The company is considering lowering the price to $6.30. Suppose this action will increase sales to 391, 000 jars. What is the incremental cost associated with producing an extra 46, 000 jars of salsa?
G
B. Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the following expected information for the year 2021: £Selling price (per unit) Direct materials (per unit)Direct labour (per unit) 155.00 60.25 30.50Other costs are estimated for the year 2021 based on the expected sales of 62,000 units. These costs are given below: Fixed Costs Variable CostsOperating Costs 420,000 1,750,000Marketing Costs 350,000 122,500Storage Costs 570,000 101,000Administration Costs 232,000 - For the year 2021, you are required to calculate: a) the expected profit or loss b) breakeven point in units and sales revenue c) margin of safety in units and % change d) the profit/loss if the selling price is increased by 5% and sales quantity decreases by 50% e) the revised break-even point in units for (d)
The process-control division expects to sell 1,250 process-control units this year. From the viewpoint of Sierra Inc. as a whole, should 1,250 Xcel-chips be transferred to the process-control division to replace circuit boards? Show your computations.
Rapid Industries has multiple divisions. One division, Iron Products, makes a component that another division, Austin, is currently purchasing on the open market. Iron Products currently has a capacity to produce 505,000 components at a variable cost of $5.50 and a full cost of $9.00. Iron Products has outside sales of 460,000 components at a price of $13.50 per unit. Austin currently purchases 55,000 units from an outside supplier at a price of $11.50 per unit. Assume that Austin desires to use a single supplier for its component. a. What will be the effect on Rapid Industries operating profit if the transfer is made internally? Assume the 55,000 units Austin needs are either purchased 100% internally or 100% externally b. What is the minimum transfer price? (Round your answer to 2 decimal places.) Minimum Transfer Price c. What is the maximum transfer price? (Round your answer to 2 decimal places.) Maximum Transfer Price 47
Adiwele Ltd has a financial year end of 31 March. The entity manufactures Compact Discs for resale. The manufacturing cost per compact disc is R2 per unit. Finished units of the compact disc are sold at R2.5 per unit. On 31 March 2021, Adiwele Ltd had 100 500 units of compact discs in stock. To sell this products Adiwele Ltd will incur the following costs: Sales commission of 20 cents per unit, Additional designing costs of 25 cents per unit, Advertising and packaging costs of 23 cents per unit, Salaries for administrative staff of R6 000 per month. Adiwele Ltd measures inventory at lower of cost and net realisable value as per IAS 2, Inventories according to IFRS at year end. What is the value of the closing inventory on 31 March 2021 as per IAS 2? 1.251 250 2. 201 000 3. 208 035 4. 136 035 5. 244 215
Describe the advantages and disadvantages of each type of sales alternative.
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…
Treaty Treat, Inc., purchases soybeans and processes them into the following three types of products: dog biscuits, cat food, and chicken feed. These products are the result of a joint process. In a typical month, there are total joint costs of $191,000. The dog biscuits and chicken feed are sold after being pressed into various shapes without further processing by TreatyTreat. (i.e. the fully- processed sales price is the same as the sales price at the point of split-off.) The cat food must be further mixed with vitamins. If the cat food spoils during the vitamin-adding process, the product can still be sold for fertilizer at $2.70 per unit. (Hint, this would be the sales value of the cat food at the split-off point.) The additional processing of cat food costs TreatyTreat $13,700 per month. Product yield and average sales value on a per-unit basis from the joint processes are as follows: Monthly Fully Processed Sales Price $9 Product Dog Biscuits Cat Food Chicken Feed Output 53,000…

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