Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would

Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would

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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Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 83,700 units at a price of $48 per unit during the current year. Its income statement for the current year is as follows: Sales $4,017,600 Cost of goods sold 1,984,000 Gross profit $2,033,600 Expenses: Selling expenses $992,000 Administrative expenses 992,000 Total expenses 1,984,000 Income from operations $49,600 The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $336,000 in yearly sales. The expansion will increase fixed costs by $33,600, but…
Required information [The following information applies to the questions displayed below.] California Orchards reports the following sales data for the year ended December 31. Grade of Walnuts Number 1 Number 2 Sales $ 448,800 367,200 Number 3 Total 204,000 $ 1,020,000 The company incurred the following joint costs for the year. $ Tree pruning and care 618,800 Pickup, sorting, and grading 176,800 2. Compute gross profit for each of the three grades of walnuts. Assume, cost of goods sold consists only of the joint costs. ✓ Answer is complete but not Gross ect. Grade Profit |Number 1 $ 99,760X Number 2 110,469X Number 3 44,171X Total $ 254,400
Required information A company sold a total of 1,000 units for total sales revenue of $70,000. The company incurred total variable expenses of $38,500 and total fixed expenses of $ 23,310. Based on this, the company reported a total contribution margin of $31,500 and net operating income of $ 8,190. Use this information to answer the following questions. Assume that all units are within the relevant range. Calculate the contribution margin ratio. Contribution margin ratio %
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The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory - P16,000; Fixed costs incurred this period - P100,000. Which of the following statements is not true? * a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000. b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000. c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs. d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.
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Eastern Chemical Company produces three products. The operating results of the current year are: Sales Actual Target Price Product Quantity Price Difference $ 304.00 $ 305.00 1,430 7,150 $ 1.00 (42.00) A В 316.60 274.60 C 715 221.50 329.00 $ 107.50 The firm sets the target price of each product at 150% of the product's total manufacturing cost. It appears that the firm was able to sell Product C at a much higher price than the target price of the product and lost money on Product B. Tom Watson, CEO, wants to promote Product C much more aggressively and phase out Product B. He believes that the information suggests that Product C has the greatest potential among the firm's three products because the actual selling price of Product C was almost 50% higher than the target price, while the firm was forced to sell Product B at a price below the target price. Both the budgeted and actual factory overhead for the current year are $701,800. The actual units sold for each product also are the…
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 83,700 units at a price of $48 per unit during the current year. Its income statement for the current year is as follows: Sales $4,017,600 Cost of goods sold 1,984,000 Gross profit $2,033,600 Expenses: Selling expenses $992,000 Administrative expenses 992,000 Total expenses 1,984,000 Income from operations $49,600 The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $336,000 in yearly sales. The expansion will increase fixed costs by $33,600, but…
Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income state for the most recent period is shown below: Hi-Tek Manufacturing, Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss. Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,500 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labo dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials Direct labor Manufacturing overhead Cost of goods sold $ 1,706,000 1,221,008 484,992 570,000 $ (85,008) Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead…
Subject: Cost Accounting
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