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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Brevall Industries makes corn oil and corn meal from harvested corn in a joint process. Corn oil can be further processed into margarine, and the corn meal can be further processed into corn muffin mix. The joint cost incurred to process the corn to the split-off point is $140,000. Information on the quantities, value, and further processing costs for the joint product appears below: Sales Value Estimated Further Sales Value Quantity At Split-off Processing Cost After Processing Corn Oil 800,000 lbs. $0.30/lb. $0.35/lb. $0.60/lb. Corn Meal 1,600,000 lbs. 0.10/lb. 0.40/lb. 0.55/lb. Brevall allocates the joint cost to the products based on physical units. Corn oil is assigned $46,667 of joint cost and corn meal is assigned $93,333 of joint cost. Which…
ardin Outfitters has a capacity to produce 16,500 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,350 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs $ 530 Fixed manufacturing costs 135 Variable selling and administrative costs 125 Fixed selling and administrative costs 95 Total costs $ 885 The company has received a special order for 1,400 tents at a price of $690 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $54 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case $ 690 Variable manufacturing costs 530 Fixed manufacturing costs 135 Variable selling and administrative costs 54 Fixed selling and…
Cantel Company produces cleaning compounds for both commercial and household customers. Some of these products are produced as part of a joint manufacturing process. For example, GR37, a coarse cleaning powder meant for commercial sale, costs $1.80 a pound to make and sells for $2.00 per pound. A portion of the annual production of GR37 is retained for further processing in a separate department where it is combined with several other ingredients to form SilPol, which is sold as a silver polish, at $5.00 per unit. The additional processing requires 1/5 pound of GR37 per unit; additional processing costs amount to $3.70 per unit of SilPol produced. Variable selling costs for SilPol average $0.20 per unit. If production of SilPol were discontinued, $4,900 of costs in the processing department would be avoided. Cantel has, at this point, unlimited demand for, but limited capacity to produce, product GR37. 2. Assume that the cost data reported for GR37 are obtained at a level of output…
Atlas Foods produces three supplemental food products simultaneously through a refining process costing $85,000. The joint products, Alfa and Betters, have a final selling price of $8 per pound and $5 per pound, respectively, after additional processing costs of $3 per pound of each product are incurred after the split-off point. Morefeed, a by-product, is sold at the split- off point for $2.50 per pound. Additional information are as follows: Alfa - 15,000 pounds of Alfa, a popular but relatively rare grain supplement of having a caloric value of 8,800 calories/pound. Betters - 5,000 pounds of Betters, a flavouring material high in carbohydrates with a caloric value of 12,000 calories/pound. Morefeed - 2,000 pounds of Morefeed, used as a cattle feed supplement with a caloric value of 1,000 calories/pound. Questions: 1. Assuming Atlas Foods does not inventory Morefeed, the by-product, the joint cost to be allocated to Betters using the net realizable method is?
Wexpro, Incorporated, produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $71,000 per ton, one-fourth of which is allocated to product X15. Six thousand five hundred units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $17 each, or processed further at a total cost of $8,800 and then sold for $22 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. Product X15 should be
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Processing cost hs
Your Corporation processes sugar beets in batches. A batch of sugar beets costs $625 to buy from farmers and $275 to crush in the company's plant. Two intermediate products, beet fiber (750 units) and beet juice (250 units), emerge from the crushing process. The beet fiber can be sold as is for $20 or processed further for $18 to make the end product industrial fiber that is sold for $45. The beet juice can be sold as is for $42 or processed further for $24 to make the end product refined sugar that is sold for $62. How much more profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar? Group of answer choices $3,975 $6,000 $4,250 ($4,250) $5,250
Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity is given below:
Nardin Outfitters has a capacity to produce 21,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,800 per tent. The cost of producing and selling one tent follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs The company has received a special order for 2,300 tents at a price of $780 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $63 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case Required: a. What is the…
SixthZ currently produces and sells 1,200 treehouses per year and sells them at $1200 per treehouse. SixthZ has the capacity to produce 1,400 treehouses. SixthZ has received a special order from the families in Davis's Village Homes community. They would like to buy 135 treehouses at a price of $800 per treehouse. The product unit cost for the treehouses is shown below: Direct Materials $500 Direct Labor $300 Variable Overhead $40 Fixed Overhead $100 SixthZ incurs no variable selling and administrative expenses. Should SixthZ accept the special order? O No, because accepting the order would result in a $113,400 decrease in operating income O No, because accepting the order would result in a $18,900 decrease in operating income O Yes, because accepting the order would result in a $54,000 increase in operating income O No, because accepting the order would result in a $5,400 decrease in operating income
Robo-Lawn is a lean manufacturer of robotic lawn mowers. The company budgets $800,000 of conversion costs and 10,000 production hours for this year. The manufacturing of each mower requires 5 production hours and $250 of raw materials. During a recent quarter, the company produced 600 mowers and sold 580 mowers. Each mower is sold for $1,000. Required: 1. Compute the conversion cost rate per mower. 2. Prepare journal entries to record (a) purchase of raw materials on credit, (b) applied conversion costs to production, (c) sale of 580 mowers on credit, and (d) cost of goods sold and finished goods inventory. I just need help on D. It needs Cost of goods sold, Finished goods inventory, and Work in process inventory.

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