Dr M's Chicken soup company produces intermediate products X, Y, and Z from a joint production process involving chicken, vegetables and broth. Each product may be sold at the split-off point or processed further. Joint production costs of $75,000 per year are allocated to the products based on the relative number of units produced. Data for M's Chicken soup company for last year follow: The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. The additional processing costs and sales value after further processing for each product (on an annual basis) are: Sales Value After Further Processing $ 534,000 $ 450,000 $ 360,000 Further Product X Product Y Product Z Sales Value at Processing Split-Off S 300,000 $ 175,000 $ 295,000 Costs S 125,000 $ 210,000 $ 135,000 Required: 1. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? p. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is financial advantage (disadvantage) of processing Product Z beyond the split-off point? d. Which of the three products should be sold as is and which ones are processed further?
Dr M's Chicken soup company produces intermediate products X, Y, and Z from a joint production process involving chicken, vegetables and broth. Each product may be sold at the split-off point or processed further. Joint production costs of $75,000 per year are allocated to the products based on the relative number of units produced. Data for M's Chicken soup company for last year follow: The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. The additional processing costs and sales value after further processing for each product (on an annual basis) are: Sales Value After Further Processing $ 534,000 $ 450,000 $ 360,000 Further Product X Product Y Product Z Sales Value at Processing Split-Off S 300,000 $ 175,000 $ 295,000 Costs S 125,000 $ 210,000 $ 135,000 Required: 1. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? p. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is financial advantage (disadvantage) of processing Product Z beyond the split-off point? d. Which of the three products should be sold as is and which ones are processed further?
Chapter1: Financial Statements And Business Decisions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Dr M's Chicken soup company produces intermediate products X, Y, and Z from a joint production process involving chicken, vegetables and broth. Each product may be sold at the split-off point or
processed further. Joint production costs of $75,000 per year are allocated to the products based on the relative number of units produced. Data for M's Chicken soup company for last year follow: The
company allocates these costs to the joint products on the basis of their total sales value at the split-off point.
The additional processing costs and sales value after further processing for each product (on an annual basis) are:
Further
Sales Value
Sales Value at Processing
Split-Off
$ 300,000
$ 175,000
$ 295,000
After Further
Costs
$ 125,000
$ 210,000
$ 135,000
Processing
$ 534,000
$ 450,000
$ 360,000
Product X
Product Y
Product Z
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point?
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
c. What is financial advantage (disadvantage) of processing Product Z beyond the split-off point?
d. Which of the three products should be sold as is and which ones are processed further?
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