Pet Products Inc. manufactures two products, cat bowls and dog bowls, from a joint process. Catbowls are allocated 50% of the total joint costs of $20,000. There are 1,000 cat bowls producedand 1,000 dog bowls produced each year. Cat Bowls can be sold at the split-off point for $12 perunit, or they can be processed further into an extra fancy cat bowl for additional processing costsof $5,083 and sold for $14 each.What is the difference in operating income between processing the cat bowls further versusselling them off at the split-off point? If income is higher by processing the cat bowls further, input yournumber as a positive number. If income is lower by processing the cat bowls further, input your number asa negative number.

Joint Cost: Joint cost is the manufacturing cost incurred on a joint production process which takes…

Answered: Pet Products Inc. manufactures two…

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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Bird’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company’s annual fixed overhead cost is $1,800,000; it uses expected capacity of 30,000 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $432,000. The following additional information is available: Year 1 Year2 Selling price per unit $500 $500 Number of units sold 24,000 28,800 Number of units produced 30,000 26,400 Beginning inventory (units) 18,000 24,000 Ending inventory (units) 24,000 ? a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold.
Kingston Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $90,000 in the production of 20,000 gallons of P and 50,000 gallons of Q. Kingston can sell P and Q at split-off for $2.00 per gallon and $2.20 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows: P Q Separable processing costs $ 22,000 $ 42,000 Sales price (per gallon) if processed beyond split-off $ 4 $ 6 what woulkd be the joint cost allocated to Q under the relative-sales-value method ? Note: Do not round intermediate calculations.
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Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $60,000 per ton, one-fourth of which is allocated to product X15. Seven thousand units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $9 each, or processed further at a total cost of $9,500 and then sold for $12 each. Required: 1. What is the financial advantage (disadvantage) of further processing product X15? 2. Should product X15 be processed further or sold at the split-off point? 1. 2. Answer is complete but not entirely correct. Financial advantage Product X15 should be 48,000 Processed further
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