Gibson Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 15,000 pounds of raw chicken that costs $8,200, the company produces two parts: 2,000 pounds of drumsticks and 5,000 pounds of breast for a processing cost of $3,887. The chicken breast is further processed into 4,200 pounds of steak for a processing cost of $2,200. The market price of drumsticks per pound is $1.65 and the market price per pound of chicken steak is $4.20. If Gibson decided to sell chicken breast instead of chicken steak, the price per pound would be $2.40. Required a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. a-2. Calculate the gross profit for each product. a-3. If the drumsticks are producing a loss, should that product line be eliminated?

Gibson Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 15,000 pounds of raw chicken that costs $8,200, the company produces two parts: 2,000 pounds of drumsticks and 5,000 pounds of breast for a processing cost of $3,887. The chicken breast is further processed into 4,200 pounds of steak for a processing cost of $2,200. The market price of drumsticks per pound is $1.65 and the market price per pound of chicken steak is $4.20. If Gibson decided to sell chicken breast instead of chicken steak, the price per pound would be $2.40. Required a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. a-2. Calculate the gross profit for each product. a-3. If the drumsticks are producing a loss, should that product line be eliminated?

Name: Gibson Chicken Corporation processes and packages chicken for grocery
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Gibson Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processesthem into two different products: chicken drumsticks and chicken steak. From a standard batch of 15,000 pounds of raw chick

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Quality Clothing, Inc., produces skorts and jumper uniforms for school children. In the process of cutting out the cloth pieces for each product, a certain amount of scrap cloth is produced. Quality has been selling this cloth scrap to Jorge's Scrap Warehouse for $3.15 per pound. Last year, the company sold 40,000 lb. of scrap, which would be enough to make 10,000 teddy bears that the management of Quality is now interested in producing. Their processes would need some reprogramming, particularly in the cutting and stitching processes, but it would require no additional worker training. However, new packaging would be needed. The total variable cost to produce the teddy bears $3.85. Fixed costs would increase by $95,000 per year for the lease of the packaging equipment and Quality estimates it could produce and sell 10,000 teddy bears per year. Finished teddy bears could be sold for $18.00 each. Calculate the effect on operating income. Round your answers to the nearest dollar. Sell at…
Sugar beets are batch-processed at Kosakowski Corporation. Farmers charge $66 for a batch of sugar beets, and the company's facility charges $17 to crush them. Beet fibre and juice, two intermediate products, are produced during the crushing process. The beet fibre may be sold for $23 if it is sold as is, or it can be processed further for $13 to produce industrial fibre, which can be sold for $36. The price of the beet juice is $42, or it can be processed further for $20 to create refined sugar, which is then sold for $84. How much more money does the business make (lose) while processing one batch of sugar beets into refined sugar and industrial fibre?a. $22b. ($18)c. ($116)d. $4
Johnson Co. makes organic non-GMO vegetable seed packets for the chef/gardener market. The standard material is 0.97 ounces per seed packet at a cost of $0.82 per ounce. Johnson Co. budgeted to make 65,000 seed packets but due to high demand, they ended up making 68,000 packets. They paid $42,000 for 60,000 ounces of seed and used all but 5,000 ounces of this purchase in production during the period. What is their material efficiency variance for this period? Enter a favorable variance is a positive number and an unfavorable variance as a negative number. Enter as a whole number, no commas and no dollar signs. Your Answer: Answer Z
Bronte Confections is known for its rich dark chocolate fudge. Bronte sells its fudge to local retailers. A "unit" of fudge is a 10-pound batch. The standard quantities of ingredients for a batch include 6 cups of sugar, 23 ounces of chocolate chips, 13 ounces of butter, and 25 ounces of evaporated milk. The standard costs for each of the ingredients are as follows: $0.25 per cup of sugar, $0.14 per ounce of chocolate chips, $0.11 per ounce of butter, and $0.08 per ounce of evaporated milk. Calculate the standard direct material cost per batch of fudge. Calculate the standard direct material (DM) cost per batch of fudge. (Enter all dollar amounts to two decimal places.) Standard Quantity X Standard Price Standard Cost Sugar per cup Chocolate chips per ounce Butter per ounce Evaporated milk per ounce Standard DM cost per batch X X
Cantel Company produces cleaning compounds for both commercial and household customers. Some of these products are produced as part of a joint manufacturing process. For example, GR37, a coarse cleaning powder meant for commercial sale, costs $2.70 a pound to make and sells for $2.80 per pound. A portion of the annual production of GR37 is retained for further processing in a separate department where it is combined with several other ingredients to form SilPol, which is sold as a silver polish, at $6.00 per unit. The additional processing requires 1/4 pound of GR37 per unit; additional processing costs amount to $4.50 per unit of SilPol produced. Variable selling costs for SilPol average $0.30 per unit. If production of SilPol were discontinued, $5,000 of costs in the processing department would be avoided. Cantel has, at this point, unlimited demand for, but limited capacity to produce, product GR37. Required: 1. Calculate the minimum number of units of SilPol that would have to be…
The Fraser Paper Company produces large rolls of white paper weighing 1,000 kilograms for wholesalers for $1,500 each. The wholesalers then cut the paper into standard-sized sheets and package it in 2-kilogram packages. These packages are sold to printers for $4 per package. There is no waste in the cutting process. Fraser Paper currently produces 5 million kilograms of paper annually at a fixed cost of $1 million and a variable cost of $0.80 per kilogram. If Fraser bypassed the wholesalers and cut its own paper for sale directly to printers, Fraser would have to add equipment and personnel with an annual fixed cost of $650,000. Incremental variable costs would be $0.10 per kilogram. Required: 1-a. Calculate the annual profit from further processing. (Enter your answer in whole dollars, not in millions.) Annual profit/loss 1-b. Should Fraser cut its own paper or continue to sell to wholesalers? O Continue to sell to wholesalers O Cut the paper themselves
Crane Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Spock, Uhura, and Sulu. 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 $179,800 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. Spock Uhura Sulu Incremental profit (loss) Sales Value at Split-Off Point Spock Uhura $209,700 Sulu 300,900 454,100 Save for Later $ Determine the incremental profit or loss that each of the three joint products. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45).) sold as is Allocated Joint Costs $39.700 60,700 79,400 Spock process further Cost to Process Further $110,400 process further 85,100 249,700 $ Sales Value of Processed Product Indicate whether each of the…
Pet Products Inc. manufactures two products, cat bowls and dog bowls, from a joint process. Cat bowls are allocated 50% of the total joint costs of $20,000. There are 1,000 cat bowls produced and 1,000 dog bowls produced each year. Cat Bowls can be sold at the split-off point for $10 per unit, or they can be processed further into an extra fancy cat bowl for additional processing costs of $4,974 and sold for $14 each. What is the difference in operating income between processing the cat bowls further versus selling them off at the split-off point? If income is higher by processing the cat bowls further, input your number as a positive number. If income is lower by processing the cat bowls further, input your number as a negative number.
Carla Vista Industrial Products Inc. is a diversified industrial-cleaner processing company. The company’s Dargan plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs (CDG). Each week, 931,500 ounces of chemical input are processed at a cost of $207,300 into 621,000 ounces of floor cleaner and 310,500 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name FloorShine. The additional processing costs for this conversion amount to $257,400.FloorShine sells at $20 per 30-ounce bottle. The table cleaner can be sold for $21 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 310,500 ounces of another compound (TCP) to the 310,500 ounces of table cleaner. This joint process will yield 310,500 ounces each of table stain remover (TSR) and table polish (TP). The additional processing costs for this process amount to $106,000. Both table…
Simbop Company reported 2020 net income of $151,000. During 2020, accounts receivable increased by $15,010 and accounts payable increased by $9,966. Depreciation expense was $39,300.Prepare the cash flows from operating activities section of the statement of cash flows.
Cantor Beverages produces bottled vegan smoothies. As part of the process, Cantor prepares and prints the labels used on the bottles. An outside supplier would provide Cantor with 20,000 pre-printed labels for $5.00 per label. Cantor estimates the company's current average cost of a label is $3.75 based upon the following information: Total cost Direct material $ 30,000 Direct labor $ 12,500 Variable overhead $ 18,750 Fixed overhead - Traceable $ 25,000 Fixed overhead - Allocated $ 7,500 $ 93,750 Outsourcing the labeling department will eliminate 80% of the Fixed overhead - Traceable expenses. Cantor expects to rent the space now available in its facility. For net income to remain constant, compute the MINIMUM rent Cantor would charge a tenant. HINT: Benefits = Costs results in no change in income. O $5,000 O $12,000 O $31,000 O $40,000 O None of the other answers are correct
BeLuxe Company manufactures a variety of natural skin care products that are used in spas across Canada. Its most popular product is its “Cleopatra Gold” serum, made with locally produced ingredients. Currently, the company is operating at about 80 percent capacity, and is quite profitable. BeLuxe has been approached by a distributor in South Korea, asking to purchase 8,000 units of the serum, at a price of $40 per unit. BeLuxe’s product cost for each unit of Cleopatra Gold serum includes the following: Direct materials $ 16 Direct labour 10 Variable manufacturing overhead 8 Fixed manufacturing overhead 15 Total manufacturing cost $49 BeLuxe will save $2 per unit in sales commission costs on this order as it has come directly from the customer, and the distributor will cover all shipping costs. Currently, the serum is sold for $65 to its other customers. Production management believes that it can handle the special order without disrupting its…