Exercise 13-13 (Algo) Sell or Process Further Decision [LO13-7] Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $56,000 per ton, one-fourth of which is allocated to product X15. Eight thousand six hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split off point for $15 each, or processed further at a total cost of $6,900 and then sold for $21 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point? 1 2 Product X15 should be i

Exercise 13-13 (Algo) Sell or Process Further Decision [LO13-7] Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $56,000 per ton, one-fourth of which is allocated to product X15. Eight thousand six hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split off point for $15 each, or processed further at a total cost of $6,900 and then sold for $21 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point? 1 2 Product X15 should be i

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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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 $74,000, and the result is 6,100 gallons of anderine and 8,500 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $9.00 per gallon and the dofinol for $5.65 per gallon. Alternatively, the anderine can be processed further at a cost of $8.50 per gallon (of anderine) into cermine. It takes 3 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $62. 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 $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity?…
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 $74,000, and the result is 6,200 gallons of anderine and 7,500 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $13.00 per gallon and the dofinol for $6.35 per gallon. Alternatively, the anderine can be processed further at a cost of $7.90 per gallon (of anderine) into cermine. It takes 2 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $59. 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 $ 2. What if the production of anderine into cermine required additional purchasing and quality inspection activity?…
2 Campbell Company currently produces and sells 7,600 units annually of a product that has a variable cost of $12 per unit and annual fixed costs of $373,000. The company currently earns a $83,000 annual profit. Assume that Campbell has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to $10 per unit. The investment would cause fixed costs to increase by $9,300 because of additional depreciation cost. Required a. Use the equation method to determine the sales price per unit under existing conditions (current equipment is used), b. Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a contribution margin income statement, assuming that Campbell invests in the new production equipment. CAMPBELL COMPANY Contribution margin Income statement Sales Variable costs…
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Exercise 13-13 (Algo) Sell or Process Further Decision [LO13-7] Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $69,000 per ton, one-fourth of which is allocated to product X15. Seven thousand five hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $12 each, or processed further at a total cost of $9,200 and then sold for $18 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point?
Question 13 Earl’s Hurricane Lamp Oil Company produces both A-1 Fancy and B Grade Oil. There are approximately $18,000 in joint costs that Earl may allocate using the relative sales value at splitoff or the net realizable value approach. At splitoff, A-1 sells for $20,000 while B grade sells for $40,000. After an additional investment of $10,000 after splitoff, $3,000 for B grade and $7,000 for A-1, both the products sell for $50,000. What is the difference in allocated costs for the A-1 product assuming applications of the net realizable value and the sales value at splitoff approach? Group of answer choices A-1 Fancy has $2,600 less joint costs allocated to it under the net realizable value approach than the sales value at splitoff approach. A-1 Fancy has $2,600 more joint costs allocated to it under the net realizable value approach than the sales value at splitoff approach. A-1 Fancy has $1,500 less joint costs allocated to it under the net realizable value approach than…
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