Oregon Lumber processes timber into four products. During September, the joint costs of processing were $280,000. There was no inventory at the beginning of the month. Production and sales value information for the month is as follows: Product Board feet Sales Value at Split-off Point Ending Inventory 2 × 4's 6,000,000 $0.30 per board foot 500,000 bdft. 2 × 6's 3,000,000 $0.40 per board foot 250,000 bdft. 4 × 4's 2,000,000 $0.45 per board foot 100,000 bdft. Slabs 1,000,000 $0.10 per board foot 50,000 bdft. Required: Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to 3 d.p. when necessary.
Question 7:
Part (a)
Oregon Lumber processes timber into four products. During September, the joint
costs of processing were $280,000. There was no inventory at the beginning of
the month. Production and sales value information for the month is as follows:
Product Board feet Sales Value at
Split-off Point Ending Inventory
2 × 4's 6,000,000 $0.30 per board foot 500,000 bdft.
2 × 6's 3,000,000 $0.40 per board foot 250,000 bdft.
4 × 4's 2,000,000 $0.45 per board foot 100,000 bdft.
Slabs 1,000,000 $0.10 per board foot 50,000 bdft.
Required: Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to 3 d.p. when
necessary.
Part (b)
Red Sauce Canning Company processes tomatoes into catsup, tomato juice and
canned tomatoes. During the summer of 2020, the joint costs of processing the
tomatoes were $420,000. There were no beginning or ending inventories for the
summer. Production and sales value information for the summer is as follows:
Product Cases Sales Value at
Split-off Point Separable Costs Selling Price
Catsup 100,000 $6 per case $3.00 per case $28 per case
Juice 150,000 8 per case 5.00 per case $25 per case
Canned 200,000 5 per case 2.50 per case $10 per case
Required: Determine the amount allocated to each product if the estimated
NRV method is used and compute the cost per case for each product.
Part (c)
Zenon Chemical Inc. processes pine rosin into three products: turpentine, paint
thinner and spot remover. During May 2020, the joint costs of processing were
$240,000. Production and sales value information for the month is as follows:
Product Units Produced Sales Value at
Split-off Point
Turpentine 15,000 liters $120,000
Paint thinner 15,000 liters $100,000
Spot remover 7,500 liters $ 50,000
Required: Determine the amount of joint cost allocated to each product if the
physical-measure method is used.
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