Net Realizable Value Method, Decision to Sell at Split-off or Process FurtherPacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 15,000 units of overs and 34,000 units ofunders were produced. Separable processing costs beyond the split-off point were as follows: overs, $20,000; unders, $16,760. Overs sell for $2.00 per unit; unders sellfor $3.14 per unit.Required:1. Allocate the $50,000 joint costs using the estimated net realizable value method.Allocated Joint CostOversUnders2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sell overs at split-off or process them further?Overs should notbe processed further as there will be $moreprofit if sold at split-off.

Joint cost:The costs or expenses incurred to produce more than one product or process is known as…

et Realizable Value Method, Decision to Sell at Split-off or Process Further acheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 15,000 units of overs and 34,000 units of nders were produced. Separable processing costs beyond the split-off point were as follows: overs, $20,000; unders, $16,760. Overs sell for $2.00 per unit; unders sell or $3.14 per unit. equired: Allocate the $50,000 joint costs using the estimated net realizable value method. Allocated Joint Cost

et Realizable Value Method, Decision to Sell at Split-off or Process Further acheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 15,000 units of overs and 34,000 units of nders were produced. Separable processing costs beyond the split-off point were as follows: overs, $20,000; unders, $16,760. Overs sell for $2.00 per unit; unders sell or $3.14 per unit. equired: Allocate the $50,000 joint costs using the estimated net realizable value method. Allocated Joint Cost

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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Net Realizable Value Method, Decision to Sell at Split-off or Process Further Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $60,000, and 14,000 units of ins and 36,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: ins, $102,000; outs, $450,000. Ins sell for $8.00 per unit; outs sell for $15.00 per unit. Required: 1. Allocate the $60,000 joint costs using the estimated net realizable value method. Allocated Joint Cost Ins $fill in the blank 1 Outs $fill in the blank 2 2. Suppose that ins could be sold at the split-off point for $7.00 per unit. Should Arvin sell ins at split-off or process them further?Ins be processed further as there will be $fill in the blank 4 profit if sold at split-off.
Denver Fabricators manufactures products DF1 and DF2 from a joint process, which also yields a by-product, BP. The company accounts for the revenues from its by-product sales as other income. Additional information follows: DF1 DF2 BP Total Units produced 27,000 18,000 15,000 60,000 Allocated joint costs ? ? ? $ 560,000 Sales value at split-off $ 561,000 $ 187,000 $ 102,000 $ 850,000 Required: Assuming that joint product costs are allocated using the net realizable value at split-off approach, what joint costs are allocated to each of the joint products DF1 and DF2 and to the by-product, BP?
4. Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costs Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $76,500, and the result is 5,900 gallons of anderine and 7,900 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $6.00 per gallon. Alternatively, the anderine can be processed further at a cost of $8.10 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $60. Required: 1. Which alternative is more cost effective and by how much?NOTE: Do NOT round interim calculations and, if required, round your answer to the nearest dollar. by $fill in the blank 2 2. What if the production of anderine into cermine required additional purchasing and quality…
The following information relates to a joint production process for three products, with a total joint production cost of $165,000. There are no separable processing costs for any of the three products. Product 1 2 Sales Value at Split-Off $ 181,500 Product 1 2 3 99,000 49,500 $ 330,000 Assume that the total sales value at the split-off point for product 1 is $66,000 instead of $181,500 and the sales value of product 3 is $3,300 instead of $49,500. Assume also that the firm treats product 3 as a joint product and uses the net realizable value method for accounting for joint costs. There are no separable processing costs for product 3. What amount of joint costs would be allocated to the three products using the relative sales value method? (Round your intermediate percentage values to 2 decimal places (i.e. 24.35%) and final answers to nearest whole dollar amount.) Units at Split-Off 320 960 1,920 3,200 Allocated Joint Cost
Sunland Inc. produces three separate products from a common process costing $100,100. Each of the products can be sold at the split- off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period. Product 10 Product 12 Product 14 (c) Product Your answer is partially correct. Product 10 Product 12 Product 14 $ Sales Value at Split-Off Point $59,700 $ 15,800 $ 55,400 Calculate incremental profit/(loss) and determine which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Incremental profit (loss) Cost to Process Further eTextbook and Media $100,100 30,800 149,700 Sales Value after Further Processing $191,000 34,700 Decision 214,000 Should be processed further Should be sold at the split-off point Should be processed further Assistance Used