Problem 11-77 (Algo) Joint Cost Allocation and Product Profitability (LO 11-3, 4) Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $41,000 per batch. The joint process produces 5,000 units of Chem-A with a market value of $177,000, and 20,000 units of Chem-B with a market value of $39,750. The conversion cost of the joint process is $17,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The company never holds any inventory. Required: a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product? c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs? Complete this question by entering your answers in the tabs below. A ired B Realizable value Allocation of joint cost Reported profit red C What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign. Chem-A < Chem-B Required A Required B >
Problem 11-77 (Algo) Joint Cost Allocation and Product Profitability (LO 11-3, 4) Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $41,000 per batch. The joint process produces 5,000 units of Chem-A with a market value of $177,000, and 20,000 units of Chem-B with a market value of $39,750. The conversion cost of the joint process is $17,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The company never holds any inventory. Required: a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product? c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs? Complete this question by entering your answers in the tabs below. A ired B Realizable value Allocation of joint cost Reported profit red C What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign. Chem-A < Chem-B Required A Required B >
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Problem 11-77 (Algo) Joint Cost Allocation and Product Profitability (LO 11-3, 4)
Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $41,000 per batch. The joint process
produces 5,000 units of Chem-A with a market value of $177,000, and 20,000 units of Chem-B with a market value of $39,750. The
conversion cost of the joint process is $17,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The
company never holds any inventory.
Required:
a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?
b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and
profit will be reported for each product?
c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating
joint process costs?
Complete this question by entering your answers in the tabs below.
Required A Required B
Required C
What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?
Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign.
Realizable value
Allocation of joint cost
Reported profit
Chem-A
Chem-B
< Required A
Required B >
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