Please provide correct answer general Accounting Kraft, Inc. produces milk at a total cost of $66,000. Theproduction generates 60,000 gallons of milk which can besold for $1 per gallon to a pasteurization company, or the milkcan be processed further into ice cream and then sold for$2.50 per gallon. It costs $75,000 more to turn the annual milksupply into ice cream.Instructions:If Kraft processes the milk into ice cream, how much is theincremental profit or loss? Should Kraft process the milk intoice cream or sell it as is?

Step 1: define Sell or further processThis is one type or form of decision making where management…

Answered: Kraft, Inc. produces milk at a total…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 23M

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Wholesome Dairy processes milk. The cost of the milk processing is $1,370,000. Wholesome is looking to increase its net income and is exploring the possibility of expanding its products to include cream and/or ice cream. It takes 2 gallons of milk to make a half gallon of ice cream. Selling Price 822,000 gallons $3.09 per gallon 6.21 per half gallon Units Produced Product Milk Ice Cream Required: 1. How many half gallons of ice cream can Wholesome make? 2. What are the additional processing costs to convert the milk to ice cream? 3. Should Wholesome sell the milk or process it further and sell ice cream?
M & Z Creameries, Corp. process milk and sugar to make vanilla ice cream. They sell their ice cream in large one-gallon containers to schools, hospitals, nursing homes, and restaurants. Each batch produces 1,700 gallons of ice cream at a cost of $840 per batch. M & Z Creameries, Corp. sells the one-gallon containers for $23.00 each and spends $0.35 for each plastic container. M & Z Creameries, Corp. has started to determine the feasibility of adding chocolate and strawberries and sell pint-size portions at local supermarkets.Further processing of each batch of ice cream could produce 24,400 pint-sized portions. A recent market study determined a demand existed for this type of product. M & Z Creameries, Corp. could sell each pint-sized portion for $2.70. Additional packaging would cost $0.30 per pint, and the additional materials would cost $0.25 per pint. There would be no change in fixed costs.Should they continue to sell only one-gallon size containers of vanilla ice…
Data table Milk Ghee, byproduct Production (in gallons) 580,000 13,000 Sales (in gallons) Selling Price per Gallon 556,800 $ 12,350 $ 1.00 0.60
Meman
New Brunswick Soy Products (NBSP) buys soy beans and processes them into other soy products. Each tonne of soy beans that NBSP purchases for $340 can be converted for an additional $180 into 550lbs of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.36, and soy oil can be sold in bulk for $4.75 per gallon. NBSP can process the 550lbs of soy meal into 700lbs of soy cookies at an additional cost of $310. Each pound of soy cookies can be sold for $2.36 per pound. The 100 gallons of soy oil can be packaged at a cost of $270 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $ 1.15. Required Allocate the joint cost to the cookies and the Soyola using: a. Sales value at splitoff method b. NRV method Should the company have processed each of the products further? What effect does the allocation method have on this decision?
Preston Products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Sales price $ 62.00 per gallonVariable costs 38.00 per gallonFixed costs 535,200 per monthPreston Products is subject to an income tax rate of 20 percent. Required:How many gallons must Preston Products sell every month to break even? How many gallons must Preston Products sell to earn a monthly operating profit of $87,000 after taxes? Note: Round your answer to the nearest whole number. Break-even sales in gallons: Number of gallons to be sold:
Hal, Dal, & Stal Dairy Farmers, Inc., produces whole milk, 2% milk, and cream. The joint cost of producing these three products is $4,000. The split-off quantities of each product are 3,500 gallons of whole milk, 1,500 gallons of 2% milk, and 500 gallons of cream. The company can sell whole milk and cream at the split-off point, but 2% milk must be processed further before being sold. Whole milk and cream sell for $2.00 per gallon and $3.00 per gallon, respectively, at the split-off point. Although 2% milk requires further processing to be sold, management estimates a market value of $1.00 per gallon for 2% milk at the split-off point. Using the market value at split-off method, determine the amount of the total joint cost to be allocated to each product.
Nervana Soy Products (NSP) buys soybeans and processes them into other soy products. Each ton of soybeans that NSP purchases for $350 can be converted for an additional $210 into 650 lbs of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.32 and soy oil can be sold in bulk for $4.5 per gallon. NSP can process the 650 pounds of soy meal into 750 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.32 per pound. The 100 gallons of soy oil can be packaged at a cost of $230 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.15. 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…
Isaac Corporation processes sugar beets in batches that it purchases from farmers for $47 a batch. A batch of sugar beets costs $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $22 or processed further for $13 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $45 or processed further for $27 to make the end product refined sugar that is sold for $67. Which of the intermediate products should be processed further? A. beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar B. beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar C. beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar D. beet fiber should be processed into industrial fiber; beet juice should be…
Assume a company purchases honeycombs from beekeepers for $2.00 a pound. The honey can be sold in raw form for $3.20 a pound or it can be used to make honey drop candies. Each package of candies contains three-quarters of a pound of honey and can be sold for $4.40. In addition to the cost of the honey, making and selling each container of candies incurs additional variable costs of $1.10 per unit. The monthly fixed costs associated with making the candies include: Master candy-maker’s salary $ 3,550 Depreciation of candy-making equipment 400 Salary of salesperson dedicated to this product 2,000 Total fixed costs $ 5,950 The candy-making equipment does not wear out through use and it has no resale value. Assuming the company makes and sells 8,000 containers of candy, what is the financial advantage (disadvantage) of continuing to process raw honey into candies? Multiple Choice $(5,150) $(4,750) $1,650 $1,250
Sagar

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