McKenzie’s Soap Sensations, Inc., produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process that costs $30,000 per batch. Each batch produces 14,800 bottles of morning glory hand soap, 12,000 bottles of snowflake sparkle hand soap, and 10,000 bottles of sea breeze hand soap at the split-off point. Each product is processed further after the split-off point, but the market value of a bottle of any of the flavors at this point is estimated to be $1.25 per bottle. The additional processing costs of morning glory, snowflake sparkle, and sea breeze hand soap are $0.50, $0.55, and $0.60 per bottle, respectively. Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for $2.00, $2.20, and $2.40 per bottle, respectively. 1. Using the net realizable value 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 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 Morning glory hand soap $fill in the blank 8 fill in the blank 9% $fill in the blank 10 $fill in the blank 11 Snowflake sparkle hand soap fill in the blank 19 fill in the blank 20% fill in the blank 21 fill in the blank 22 Sea breeze hand soap fill in the blank 30 fill in the blank 31% fill in the blank 32 fill in the blank 33 Totals

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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McKenzie’s Soap Sensations, Inc., produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process that costs $30,000 per batch. Each batch produces 14,800 bottles of morning glory hand soap, 12,000 bottles of snowflake sparkle hand soap, and 10,000 bottles of sea breeze hand soap at the split-off point. Each product is processed further after the split-off point, but the market value of a bottle of any of the flavors at this point is estimated to be $1.25 per bottle. The additional processing costs of morning glory, snowflake sparkle, and sea breeze hand soap are $0.50, $0.55, and $0.60 per bottle, respectively. Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for $2.00, $2.20, and $2.40 per bottle, respectively.

1. Using the net realizable value 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	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
Morning glory hand soap								$fill in the blank 8	fill in the blank 9%	$fill in the blank 10	$fill in the blank 11
Snowflake sparkle hand soap								fill in the blank 19	fill in the blank 20%	fill in the blank 21	fill in the blank 22
Sea breeze hand soap								fill in the blank 30	fill in the blank 31%	fill in the blank 32	fill in the blank 33
Totals