Forest Products, Incorporated, manufactures three products (FP-10, FP-20, and FP-40) from a single, joint input. None of the products can be sold without further processing. In November, joint product costs were $241,000. Additional information follows: Sales Values Product FP-10 FP-20 FP-40 Units Produced 96,000 144,000 80,000 $ 175,500 310,500 85,000 Processing Costs (After Split-Off) $ 29,000 109,000 25,000 The sale of FP-40 has been banned by a recent law. If FP-40 is produced, disposal in an approved manner costs $120,000 for every 80,000 units produced. Required: a. Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP-10 and FP-20. What joint costs would be allocated to FP-10 and FP-20? b. There is a possibility that a market for FP-10 and FP-20 at split-off will develop. In other words, it will be possible to sell the two products rather than process them further. At what sales value (at split-off) would Forest Products be indifferent between selling them at split-off and processing them further? c. At what sales value (at split-off) would Forest Products be indifferent between selling them at split-off and processing them further, in case the disposal cost for FP-40 increases to $150,000 for every 80,000 units of FP-40 produced? Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP- 10 and FP-20. What joint costs would be allocated to FP-10 and FP-20? Joint costs allocated FP-10 FP-20
Forest Products, Incorporated, manufactures three products (FP-10, FP-20, and FP-40) from a single, joint input. None of the products can be sold without further processing. In November, joint product costs were $241,000. Additional information follows: Sales Values Product FP-10 FP-20 FP-40 Units Produced 96,000 144,000 80,000 $ 175,500 310,500 85,000 Processing Costs (After Split-Off) $ 29,000 109,000 25,000 The sale of FP-40 has been banned by a recent law. If FP-40 is produced, disposal in an approved manner costs $120,000 for every 80,000 units produced. Required: a. Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP-10 and FP-20. What joint costs would be allocated to FP-10 and FP-20? b. There is a possibility that a market for FP-10 and FP-20 at split-off will develop. In other words, it will be possible to sell the two products rather than process them further. At what sales value (at split-off) would Forest Products be indifferent between selling them at split-off and processing them further? c. At what sales value (at split-off) would Forest Products be indifferent between selling them at split-off and processing them further, in case the disposal cost for FP-40 increases to $150,000 for every 80,000 units of FP-40 produced? Complete this question by entering your answers in the tabs below. Required A Required B Required C Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP- 10 and FP-20. What joint costs would be allocated to FP-10 and FP-20? Joint costs allocated FP-10 FP-20
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Forest Products, Incorporated, manufactures three products (FP-10, FP-20, and FP-40) from a single, joint input. None of the products
can be sold without further processing. In November, joint product costs were $241,000. Additional information follows:
Sales Values
Product
FP-10
FP-20
FP-40
Units
Produced
96,000
144,000
80,000
$ 175,500
310,500
85,000
Processing
Costs (After
Split-Off)
$ 29,000
109,000
25,000
The sale of FP-40 has been banned by a recent law. If FP-40 is produced, disposal in an approved manner costs $120,000 for every
80,000 units produced.
Required:
a. Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP-10 and
FP-20. What joint costs would be allocated to FP-10 and FP-20?
b. There is a possibility that a market for FP-10 and FP-20 at split-off will develop. In other words, it will be possible to sell the two
products rather than process them further. At what sales value (at split-off) would Forest Products be indifferent between selling
them at split-off and processing them further?
c. At what sales value (at split-off) would Forest Products be indifferent between selling them at split-off and processing them further,
in case the disposal cost for FP-40 increases to $150,000 for every 80,000 units of FP-40 produced?
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
Assuming that Forest Products continues to use the physical quantities method of allocation and to manufacture and sell FP-
10 and FP-20. What joint costs would be allocated to FP-10 and FP-20?
Joint costs allocated
FP-10
FP-20
<Required A
Required B >
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