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It's mind-boggling the number of products that are made with cotton. From salad dressing, to T-shirts, to diapers, to animal seed, the possibilities are practically endless. Here is just one combination of products that could be produced from raw cotton, along with a variety of ways the manufacturer could allocate costs between the products. Let's start with the joint cleaning and separation process, which allows for the cotton seed and the lint to be separately identifiable. The following quantities of cotton seed and lint were produced for a total cost (including the raw cotton and processing costs) of $222,000. 399,000 pounds of cotton seed 301,000 pounds of lint (fiber) Both of these products can be sold at this point, or they can be processed further. In their present state, they're worth:

It's mind-boggling the number of products that are made with cotton. From salad dressing, to T-shirts, to diapers, to animal seed, the possibilities are practically endless. Here is just one combination of products that could be produced from raw cotton, along with a variety of ways the manufacturer could allocate costs between the products. Let's start with the joint cleaning and separation process, which allows for the cotton seed and the lint to be separately identifiable. The following quantities of cotton seed and lint were produced for a total cost (including the raw cotton and processing costs) of $222,000. 399,000 pounds of cotton seed 301,000 pounds of lint (fiber) Both of these products can be sold at this point, or they can be processed further. In their present state, they're worth:

FINANCIAL ACCOUNTING
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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It's mind-boggling the number of products that are made with cotton. From salad dressing, to T-shirts, to diapers, to animal seed, the possibilities are practically endless. Here is just one combination of products that could be produced from raw cotton, along with a variety of ways the manufacturer could allocate costs between the products. Let's start with the joint cleaning and separation process, which allows for the cotton seed and the lint to be separately identifiable. The following quantities of cotton seed and lint were produced for a total cost (including the raw cotton and processing costs) of $222,000. 399,000 pounds of cotton seed 301,000 pounds of lint (fiber) Both of these products can be sold at this point, or they can be processed further. In their present state, they're worth: $0.13 per pound for cotton seed $0.75 per pound for lint This particular company presses the cotton seed to make oil and uses the lint to make thread. The additional costs and processes generate higher sales values for the final products, as follows. Seed/Oil Lint/Thread Additional cost $20,000 $83,900 Final sales value $80,000 $317,000 (a) (b) Allocate the joint process costs using the NRV method. (Round proportion to 3 decimal places, e.g. 0.251 and final answers to O decimal places, e.g. 5,125.) Seed Share of joint cost $ Lint
Transcribed Image Text:It's mind-boggling the number of products that are made with cotton. From salad dressing, to T-shirts, to diapers, to animal seed, the possibilities are practically endless. Here is just one combination of products that could be produced from raw cotton, along with a variety of ways the manufacturer could allocate costs between the products. Let's start with the joint cleaning and separation process, which allows for the cotton seed and the lint to be separately identifiable. The following quantities of cotton seed and lint were produced for a total cost (including the raw cotton and processing costs) of $222,000. 399,000 pounds of cotton seed 301,000 pounds of lint (fiber) Both of these products can be sold at this point, or they can be processed further. In their present state, they're worth: $0.13 per pound for cotton seed $0.75 per pound for lint This particular company presses the cotton seed to make oil and uses the lint to make thread. The additional costs and processes generate higher sales values for the final products, as follows. Seed/Oil Lint/Thread Additional cost $20,000 $83,900 Final sales value $80,000 $317,000 (a) (b) Allocate the joint process costs using the NRV method. (Round proportion to 3 decimal places, e.g. 0.251 and final answers to O decimal places, e.g. 5,125.) Seed Share of joint cost $ Lint
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