Q2 Joint cost allocation: sell immediately or process further. Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans that ISP purchases for $300 can be converted for an additional $200 (joint cost) into 500 pounds of soy meal and 100 gallons of soy oil. 1 ton = 2000 pound A pound of soy meal can be sold at split off for $1 and soy oil can be sold in bulk for $4 per gallon. ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2 per pound. The 100 gallons of soy oil can be packaged at a cost of $200 and sold for $12.5 per gallons. Required 1. Allocate the joint cost to the cookies and the soy oil using the following: a. Sales value at split off method b. NRV method

Q2 Joint cost allocation: sell immediately or process further. Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans that ISP purchases for $300 can be converted for an additional $200 (joint cost) into 500 pounds of soy meal and 100 gallons of soy oil. 1 ton = 2000 pound A pound of soy meal can be sold at split off for $1 and soy oil can be sold in bulk for $4 per gallon. ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2 per pound. The 100 gallons of soy oil can be packaged at a cost of $200 and sold for $12.5 per gallons. Required 1. Allocate the joint cost to the cookies and the soy oil using the following: a. Sales value at split off method b. NRV method

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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A7
Relevant costs for decision making Cipla Uganda pharmaceutical company, buys a chemical for $10,000, which it breaks down into two components: Component Sales value ($) Allocated costs ($) A 8,000 7,000 B 4,000 5,000 Component A can be converted into Product A if $6,000 is spent on further processing. Product A would sell for $12,000. Component B can be converted into Product B if $10,000 is spent on further processing. Product B would sell for $17,000. Required; What processing decision should Cipla make in order to maximize profits? Illustrate the production plan to show the contribution margin.
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•Use the following information for the next 3 questions (3, 4 &5). Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.4 per pound of flour. Division Y makes loaves of bread that sell for $2 each. Division Y incurs costs of $1.3 per loaf, excluding the cost of the flour. Eachloafofbreaduses0.25poundofflour. Transferpriceissetat$0.6/lb. 3. What is the operating income per pound of flour for Division X? 4. What is the operating income per loaf for Division Y? 5. What is the operating income per loaf for the entire organization?
Illion Soy Products (ASP) buys soybeans and processes them into other soy products. Each ton of soybeans that ASP purchases for $320 can be converted for an additional $220 into 525 lbs of soy meal and 120 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.32 and soy oil can be sold in bulk for $4.5 per gallon. ASP can process the 525 pounds of soy meal into 675 pounds of soy cookies at an additional cost of $310. Each pound of soy cookies can be sold for $2.32 per pound. The 120 gallons of soy oil can be packaged at a cost of $250 and made into 480 quarts of Soyola. Each quart of Soyola can be sold for $1.15. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Sales value of total production at splitoff…
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Product b) Chocfee Dairy Ltd gathered this data for two of its Current Sales Additional Processing Value Sales Value if Costs Coffee beans $ 8.000 000 Chocolate malt $ 5.000 000 Processed Further $ 3.000 products that it produces: $ 2 000 Required: Which of the products should be processed further? ANSWER b): $10 $7