Sales Values and Additional Cost if Processed Beyond Split-off Sales Value $550,000 540,000 975,000 Sales Value at Split-off $400,000 350,000 850,000 Additional Cost $130,000 240,000 118,000 Product K L
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Salt Company manufactures products J, K, and L in a joint process. The company incurred $480,000 of joint
An analysis revealed that all costs incurred after the split-off point are variable and directly traceable to the individual product line.
Required:
A. If Salt allocates joint costs on the basis of the products' sales values at the split-off point, what amount of joint cost would be allocated to product J?
B. If production of J totaled 50,000 gallons for the period, determine the relevant cost per gallon that should be used in decisions that explore whether to sell at the split-off point or process further? Briefly explain your answer.
C. At the beginning of the current year, Salt decided to process all three products beyond the split-off point. If the company desired to maximize income, did it err in regards to its decision with any of the products and by how much?
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