**Special Order, Traditional Analysis****Overview:**Fiorello Company manufactures two types of cold-pressed olive oil: Refined Oil and Top Quality Oil, produced from a joint process. The joint costs for a standard production run are $88,850, generating 34,200 gallons of Refined Oil and 17,100 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.35 per gallon for Refined Oil and $1.95 per gallon for Top Quality Oil. Refined Oil sells for $4.20 per gallon, while Top Quality Oil sells for $8.40 per gallon.MangiareBuono, a supermarket chain, requests Fiorello to supply 34,200 gallons of Top Quality Oil at $8.20 per gallon. MangiareBuono plans to package the oil in 16-ounce bottles under its label.By accepting the order, Fiorello saves $0.27 per gallon in packaging costs for Top Quality Oil. There is ample capacity for this order, but the Refined Oil market is saturated, and any additional Refined Oil sales would be at $3.12 per gallon. Assume no significant non-unit-level activity costs.**Required:**1. **Profit for Standard Production:** - The profit from one production run of Refined Oil and Top Quality Oil is **$81,560**.2. **Special Order Decision:** - Fiorello should accept the special order. The analysis takes into account the joint and additional processing costs, potential savings on packaging, and market conditions for the products involved.

Formula: Contribution margin = Selling price - Variable cost

Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $88,850 for a standard production run that generates 34,200 gallons of Refined Oil and 17,100 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.35 per gallon for Refined Oil and $1.95 per gallon for Top Quality Oil. Refined Oil sells for $4.20 per gallon, while Top Quality Oil sells for $8.40 per gallon. MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 34,200 gallons of Top Quality Oil at a price of $8.2 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.27 per gallon in packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated, and any additional sales of Refined Oil would take place at a price of $3.12 per gallon. Assume that no significant non-unit-level activity costs are incurred. Required: 1. What is the profit normally earned on one production run of Refined Oil and Top Quality Oil? 81,560 x

Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $88,850 for a standard production run that generates 34,200 gallons of Refined Oil and 17,100 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.35 per gallon for Refined Oil and $1.95 per gallon for Top Quality Oil. Refined Oil sells for $4.20 per gallon, while Top Quality Oil sells for $8.40 per gallon. MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 34,200 gallons of Top Quality Oil at a price of $8.2 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.27 per gallon in packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated, and any additional sales of Refined Oil would take place at a price of $3.12 per gallon. Assume that no significant non-unit-level activity costs are incurred. Required: 1. What is the profit normally earned on one production run of Refined Oil and Top Quality Oil? 81,560 x

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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Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs ofthis process were $50,000, and 14,000 units of overs and 36,000 units of unders were produced.Separable processing costs beyond the split-off point were as follows: overs, $18,000; unders,$23,040. Overs sell for $2.00 per unit; unders sell for $3.14 per unit.Required:1. Allocate the $50,000 joint costs using the estimated net realizable value method.2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sellovers at split-off or process them further? Show supporting computations.
Special Order, Traditional Analysis Fiorello Company manufactures two types of cold-pressed olive oil, Refined Oil and Top Quality Oil, out of a joint process. The joint (common) costs incurred are $91,200 for a standard production run that generates 32,800 gallons of Refined Oil and 16,400 gallons of Top Quality Oil. Additional processing costs beyond the split-off point are $2.50 per gallon for Refined Oil and $1.90 per gallon for Top Quality Oil. Refined Oil sells for $4.45 per gallon, while Top Quality Oil sells for $8.15 per gallon. MangiareBuono, a supermarket chain, has asked Fiorello to supply it with 32,800 gallons of Top Quality Oil at a price of $7.9 per gallon. MangiareBuono plans to have the oil bottled in 16-ounce bottles with its own MangiareBuono label. If Fiorello accepts the order, it will save $0.28 per gallon in packaging of Top Quality Oil. There is sufficient excess capacity for the order. However, the market for Refined Oil is saturated, and any additional sales…
Corey Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $320,000 in the production of 25,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data: W X Separable processing costs $ 45,000 $ 150,000 Sales price (per gallon) if processed beyond split-off $ 15 $ 13 What would be the joint cost allocated to X under the net-realizable-value method ? Note: Do not round intermediate calculations.
Differential Chemical produced 10,500 gallons of Preon and 14,000 gallons of Paron. Joint costs incurred in producing the two products totaled $8,000. At the split-off point, Preon has a market value of $8.00 per gallon and Paron $4.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used.
Milo Manufacturing produces products Kappa and Lambda from a joint process. Total joint costs are $168,000. The sales value at split-off was $174,960 for 8,400 units of Kappa and $63,280 for 12,600 units of Lambda. Required: What joint costs are allocated to the two products using the net realizable value at split-off approach? Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. What joint costs are allocated to the two products using the physical quantities method? Note: Do not round intermediate calculations. Kappa Lambda a. Net realizable value method ??? ??? b. Physical quantities method ??? ???
Alternative joint-cost-allocation methods, further process decision. The Tempura spirits Company produces two products – methanol (wood alcohol) and turpentine—by a joint process. Joint costs amount to $ 124,000 per batch of output. Each batch totals 9,500 gallons:25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol,$4 per gallon, and turpentine,$2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon.
Integrity Company manufactures two products, Alpha and Beta from a joint process. One production run costs P20,000 and results in 3,000 units of Alpha and 4,000 units of Beta. Neither product is salable at split-off but must be processed further such that the separable cost for Alpha is P10 per unit and for Beta is P5 per unit. The eventual market price for Alpha is P20 and for Beta, P10. If the company uses the constant gross margin approach in allocating joint cost to joint products, determine the total cost of product Alpha. Choices: • P12,000 • P18,000 • P38,000 • P42,000
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Two products, Ql and VH, emerge from a joint process. Product QI has been allocated $27,300 of the total joint costs of $48,000. A total of 2.200 units of product Ql are produced from the joint process. Product Ql can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,200 and then sold for $13 per unit. If product Ql is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point? Multiple Cholce ($33,900) ${5.800) $18.400 ($21,500)
Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $360,000 for a standard production run that generates 170,000 pints of Smooth Skin and 300,000 pints of Silken Skin. Smooth Skin sells for $3.20 per pint, while Silken Skin sells for $5.20 per pint. Required: 1. Assuming that both products are sold at the split-off point, how much of the joint cost of each production run is allocated to Smooth Skin using the relative sales value method? 2. If no separable costs are incurred after the split-off point, how much of the joint cost of each production run is allocated to Silken Skin using the physical measure method? 3. If separable processing costs beyond the split-off point are $1.80 per pint for Smooth Skin and $1.70 per pint for Silken Skin, how much of the joint cost of each production run is allocated to Silken Skin using a net realizable value method? 4. If separable processing costs beyond the split-off…
3.) Sweet Mandarines processes different types of mandarines. The most common raw material that it processes results in three joint products: Larco, Marco, and Narco. Each of these products can be sold as is, or each can be processed further and sold for a higher price. The company incurs joint costs of $180,000 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product. uwm m w w w w wwm ww u ww Sales Value at Allocated Joint Cost to Process Sales Value of w w ww m Split-Off point Costs Further Processed Product Larco $200,000 $40,000 $110,000 $330,000 Marco 300,00 60,000 75,000 400,0 Narco 400,000 80,000 250,000 600,000 Determine whether each of the three joint products should be sold as is, or processed further. ww m m w