Joint cost allocation Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $250 per batch. At the split-off point, one batch produces 80, 40, and 25 bottles of hand, body, and foot lotion, respectively. After the split-off point, hand lotion is sold immediately for $2.50 per bottle. Body lotion is processed further at an additional cost of $0.25 per bottle and then sold for $5.75 per bottle. Foot lotion is processed further at an additional cost of $0.85 per bottle and then sold for $4.00 per bottle. Assume that body and foot lotion could be sold at the split-off point for $3.00 and $3.20 per bottle, respectively. Using the market value at split-off method, allocate the joint costs of production to each product. Round your answers to two decimal places. Joint Product Bottles per Batch Market Value per Bottle at Split-Off Total Market Value at Split-Off Percent of Total MV at Split-Off Joint Costs Allocation Hand lotion $ $ % $ $ Body lotion % Foot lotion % Totals $ $ A lotion manufacturing company produces three types of lotions. After the split-off point the company continues to sell the body lotion and makes $0.25 profit per bottle. The foot lotion generates $0.05 loss per bottle if it continues after the split-off point. Which lotion should be continued after the split-off point? Hand lotion Body lotion Foot lotion Body and Foot lotion Joint Product Bottles per Batch Market Value per Bottle at Split-Off Total Market Value at Split-Off Market Price per Bottle Added Cost per Bottle NRV per Bottle Total Net Realizable Value Greater of Total NRV and Total Market Value at Split-Off Proportion Joint Costs Allocation Hand lotion $ $ $ $ $ $ $ % $ $ Body lotion % Foot lotion % Totals $ $ $ Allocate the joint costs of production to each product using the net realizable value method. Round your answers to two decimal places.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Joint cost allocation
Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing
- Using the market value at split-off method, allocate the joint costs of production to each product. Round your answers to two decimal places.
|
Joint Product |
Bottles |
Market Value |
Total Market |
Percent of |
Joint Costs |
Allocation |
|
Hand lotion |
$ |
$ |
% |
$ |
$ |
|
|
Body lotion |
|
% |
||||
|
Foot lotion |
|
% |
||||
|
Totals |
$ |
$ |
- A lotion manufacturing company produces three types of lotions. After the split-off point the company continues to sell the body lotion and makes $0.25 profit per bottle. The foot lotion generates $0.05 loss per bottle if it continues after the split-off point. Which lotion should be continued after the split-off point?
- Hand lotion
- Body lotion
- Foot lotion
- Body and Foot lotion
|
Joint Product |
Bottles |
Market Value |
Total Market |
Market Price |
Added Cost |
NRV |
Total Net |
Greater of |
Proportion |
Joint |
Allocation |
|
Hand lotion |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
% |
$ |
$ |
|
|
Body lotion |
% |
||||||||||
|
Foot lotion |
% |
||||||||||
|
Totals |
$ |
$ |
$ |
- Allocate the joint costs of production to each product using the net realizable value method. Round your answers to two decimal places.
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