Eco Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which Eco dumps at negligible costs in a local drainage area. In June 2020, the following data were reported for the production and sales of beef-flavored and shrimp-flavored Due to the popularity of its microwavable products, Eco decides to add a new line of products that targets dieters. These new products are produced by adding a special ingredient to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. Following are the monthly data for all the products: E (Click the icon to view the monthly data for all pro ramen: E (Click the icon to view the data.) Read the requirements. Requirements 1. Calculate Eco's gross-margin percentage for Special B and Special S when joint costs are allocated using the following: a. Sales value at splitoff method b. Physical-measure method c. Net realizable value method 2. Recently, Eco discovered that the stock it is dumping can be sold to cattle ranchers at $5 per ton. In a typical month with the production levels shown, 2,000 tons of stock are produced and can be sold by incurring marketing costs of $8,700. Sherrie Dong, a management accountant, points out that treating the stock as a joint product and using the sales value at splitoff method, the stock product would lose about $1,008 each month, so it should not be sold. How did Dong arrive at that final number, and what do you think of her analysis? Should Eco sell the stock? Requirement 1. Calculate Eco's gross-margin percentage for Special B and Special S using the different methods for allocating the joint costs. a. Allocate the joint costs using the sales value at splitoff method. Begin by entering the amounts in the table and allocate the joint costs. (Enter the weighting to two decimal places.) Sales value at splitoff: Special B/ Special S/ shrimp ramen beef ramen Total Sales value of total production at splitoff Weighting Joint costs allocated - x Print Done Data Table Data Table B B D Joint Costs Special B Special S 11 Joint costs (costs of noodles, spices, and other 12 inputs and processing to splitoff point) Separable costs of processing 12,000 tons of 13 Beef Ramen into 15,000 tons of Special B Separable costs of processing 22,000 tons of 14 Shrimp Ramen into 25,000 tons of Special S Joint Costs Joint costs (costs of noodles, spices, and other 2 inputs and processing to splitoff point) 300,000 Is 300,000 Beef Shrimp Ramen 3 Ramen $ 105,000 4 Beginning inventory (tons) 5 Production (tons) 12,000 22,000 I $ 250,000 Вeef Shrimp Ramen Special B Special S 6 Sales (tons) 12,000 22,000 15 Ramen 7 Selling price per ton 25 S 45 16 Beginning inventory (tons) 17 Production (tons) 12,000 22,000 15,000 25.000 18 Transfer for further processing (tons) 12,000 22,000 Print Done 19 Sales (tons) 15,000 25,000 20 Selling price per ton 25 $ 45 S 30 s 59
Eco Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which Eco dumps at negligible costs in a local drainage area. In June 2020, the following data were reported for the production and sales of beef-flavored and shrimp-flavored Due to the popularity of its microwavable products, Eco decides to add a new line of products that targets dieters. These new products are produced by adding a special ingredient to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. Following are the monthly data for all the products: E (Click the icon to view the monthly data for all pro ramen: E (Click the icon to view the data.) Read the requirements. Requirements 1. Calculate Eco's gross-margin percentage for Special B and Special S when joint costs are allocated using the following: a. Sales value at splitoff method b. Physical-measure method c. Net realizable value method 2. Recently, Eco discovered that the stock it is dumping can be sold to cattle ranchers at $5 per ton. In a typical month with the production levels shown, 2,000 tons of stock are produced and can be sold by incurring marketing costs of $8,700. Sherrie Dong, a management accountant, points out that treating the stock as a joint product and using the sales value at splitoff method, the stock product would lose about $1,008 each month, so it should not be sold. How did Dong arrive at that final number, and what do you think of her analysis? Should Eco sell the stock? Requirement 1. Calculate Eco's gross-margin percentage for Special B and Special S using the different methods for allocating the joint costs. a. Allocate the joint costs using the sales value at splitoff method. Begin by entering the amounts in the table and allocate the joint costs. (Enter the weighting to two decimal places.) Sales value at splitoff: Special B/ Special S/ shrimp ramen beef ramen Total Sales value of total production at splitoff Weighting Joint costs allocated - x Print Done Data Table Data Table B B D Joint Costs Special B Special S 11 Joint costs (costs of noodles, spices, and other 12 inputs and processing to splitoff point) Separable costs of processing 12,000 tons of 13 Beef Ramen into 15,000 tons of Special B Separable costs of processing 22,000 tons of 14 Shrimp Ramen into 25,000 tons of Special S Joint Costs Joint costs (costs of noodles, spices, and other 2 inputs and processing to splitoff point) 300,000 Is 300,000 Beef Shrimp Ramen 3 Ramen $ 105,000 4 Beginning inventory (tons) 5 Production (tons) 12,000 22,000 I $ 250,000 Вeef Shrimp Ramen Special B Special S 6 Sales (tons) 12,000 22,000 15 Ramen 7 Selling price per ton 25 S 45 16 Beginning inventory (tons) 17 Production (tons) 12,000 22,000 15,000 25.000 18 Transfer for further processing (tons) 12,000 22,000 Print Done 19 Sales (tons) 15,000 25,000 20 Selling price per ton 25 $ 45 S 30 s 59
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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