Illion Soy Products (ASP) buys soybeans and processes them into other soy products. Each ton of soybeans that ASP purchases for $250 can be converted for an additional $180 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.08 and soy oil can be sold in bulk for $4 per gallon. ASP can process the 700 pounds of soy meal into 800 pounds of soy cookies at an additional cost of $370. Each pound of soy cookies can be sold for $2.08 per pound. The 80 gallons of soy oil can be packaged at a cost of $200 and made into 320 quarts of Soyola. Each quar of Soyola can be sold for $1.45. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Sales value of total production at splitoff Weighting Joint costs allocated Cookies/ Soy Meal Soyolal Soy Oil Total Requirements 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method 2. Should ASP have processed each of the products further? What effect does the allocation method have on this decision? - X
Illion Soy Products (ASP) buys soybeans and processes them into other soy products. Each ton of soybeans that ASP purchases for $250 can be converted for an additional $180 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.08 and soy oil can be sold in bulk for $4 per gallon. ASP can process the 700 pounds of soy meal into 800 pounds of soy cookies at an additional cost of $370. Each pound of soy cookies can be sold for $2.08 per pound. The 80 gallons of soy oil can be packaged at a cost of $200 and made into 320 quarts of Soyola. Each quar of Soyola can be sold for $1.45. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Sales value of total production at splitoff Weighting Joint costs allocated Cookies/ Soy Meal Soyolal Soy Oil Total Requirements 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method 2. Should ASP have processed each of the products further? What effect does the allocation method have on this decision? - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Illion Soy Products (ASP) buys soybeans and processes them into other soy products. Each ton of soybeans that ASP purchases for $250 can be converted for an additional $180 into 700 lbs of soy meal and 80 gallons of soy oil. A pound of soy meal can be sold at splitoff for
$1.08 and soy oil can be sold in bulk for $4 per gallon.
ASP can process the 700 pounds of soy meal into 800 pounds of soy cookies at an additional cost of $370. Each pound of soy cookies can be sold for $2.08 per pound. The 80 gallons of soy oil can be packaged at a cost of $200 and made into 320 quarts of Soyola. Each quart
of Soyola can be sold for $1.45.
Read the requirements.
Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method.
a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.)
Sales value of total production at splitoff
Weighting
Joint costs allocated
Cookies/
Soy Meal
Soyola/
Soy Oil
Total
C
Requirements
1. Allocate the joint cost to the cookies and the Soyola using the following:
a. Sales value at splitoff method
b. NRV method
2. Should ASP have processed each of the products further? What effect does
the allocation method have on this decision?
- X
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