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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 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.) Cookies/ Soy Meal Sales value of total production at splitoff Weighting Joint costs allocated 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 Soyola. Each qua

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 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.) Cookies/ Soy Meal Sales value of total production at splitoff Weighting Joint costs allocated 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 Soyola. Each qua

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Illion Soy Products (ASP) Joint Cost Allocation** 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 pounds 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. **Requirements** 1. Allocate the joint cost to the cookies and the Soyola using the following: - Sales value at splitoff method - NRV method 2. Assess whether ASP should have processed each of the products further and consider the effect of the allocation method on this decision. **Task a: Joint Cost Allocation Using Sales Value at Splitoff Method** - **Form:** A table is provided with columns for Cookies/Soy Meal, Soy Oil/Soyola, and Total. - **Entries Required:** Allocate the sales value of total production at splitoff, calculate weightings, and determine joint costs allocated for each product. - **Instructions:** Round the weights to three decimal places and joint costs to the nearest dollar. **Diagram Explanation** This section includes a requirement box framing the task objectives at the center of the illustration. It outlines the process you need to follow in allocating joint costs according to specified methods and assesses the decision-making process in product processing.
Transcribed Image Text:**Illion Soy Products (ASP) Joint Cost Allocation** 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 pounds 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. **Requirements** 1. Allocate the joint cost to the cookies and the Soyola using the following: - Sales value at splitoff method - NRV method 2. Assess whether ASP should have processed each of the products further and consider the effect of the allocation method on this decision. **Task a: Joint Cost Allocation Using Sales Value at Splitoff Method** - **Form:** A table is provided with columns for Cookies/Soy Meal, Soy Oil/Soyola, and Total. - **Entries Required:** Allocate the sales value of total production at splitoff, calculate weightings, and determine joint costs allocated for each product. - **Instructions:** Round the weights to three decimal places and joint costs to the nearest dollar. **Diagram Explanation** This section includes a requirement box framing the task objectives at the center of the illustration. It outlines the process you need to follow in allocating joint costs according to specified methods and assesses the decision-making process in product processing.
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