Homework Help is Here – Start Your Trial Now!
Business
Accounting
The Universal Solutions Co. (USC) operates several plants that process raw material X and yield three outputs: rough nut, natural nut, and flexi nut. The first two outputs are solids, measured in tons, and the third is a liquid, also measured in tons. The company assumes for its costing purposes that all three outputs are jointly produced until a single split off point, at which each output appears separately and is then further processed individually. For April 2019, the following data apply: • Rough-150 tons produced and sold at $ 900 per ton. Separable costs beyond the split off point are S8,750. This produces Rough 1, used by the paper industry. • Natural-50 tons produced and sold at $ 7,500 per ton. Separable costs beyond the split off point are $5,250. This produces Natural 1, used by the construction industry. • Flexi-800 tons produced and sold at $65 per ton. Separable costs beyond the split off point are $10,500. This produces Flexi 1, used in the production of detergents. USC acquired raw material X for $70,000 in April. Operations cost of the plants up to split off point was $20,000. From this same production process, a product of relatively low sales value is also produced, called bendy nut. Bendy is a grainy solid, which can be processed further to earn higher sales, but the company chooses to sell it in its original form, earning from the sheer volume sold. 2,000 tons of bendy were produced in April, and sold in May, at an average price of $120 per ton. Required: a. Draw a diagram showing the joint cost situation for USC. b. Allocate the April 2019 joint cost among the three main products, ignoring Bendy, and using the net realizable value method (NRV). c. Show the operating income for each product using the NRV method.

The Universal Solutions Co. (USC) operates several plants that process raw material X and yield three outputs: rough nut, natural nut, and flexi nut. The first two outputs are solids, measured in tons, and the third is a liquid, also measured in tons. The company assumes for its costing purposes that all three outputs are jointly produced until a single split off point, at which each output appears separately and is then further processed individually. For April 2019, the following data apply: • Rough-150 tons produced and sold at $ 900 per ton. Separable costs beyond the split off point are S8,750. This produces Rough 1, used by the paper industry. • Natural-50 tons produced and sold at $ 7,500 per ton. Separable costs beyond the split off point are $5,250. This produces Natural 1, used by the construction industry. • Flexi-800 tons produced and sold at $65 per ton. Separable costs beyond the split off point are $10,500. This produces Flexi 1, used in the production of detergents. USC acquired raw material X for $70,000 in April. Operations cost of the plants up to split off point was $20,000. From this same production process, a product of relatively low sales value is also produced, called bendy nut. Bendy is a grainy solid, which can be processed further to earn higher sales, but the company chooses to sell it in its original form, earning from the sheer volume sold. 2,000 tons of bendy were produced in April, and sold in May, at an average price of $120 per ton. Required: a. Draw a diagram showing the joint cost situation for USC. b. Allocate the April 2019 joint cost among the three main products, ignoring Bendy, and using the net realizable value method (NRV). c. Show the operating income for each product using the NRV method.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4CMA: Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint...
See similar textbooks
icon
Related questions
Question
The Universal Solutions Co. (USC) operates several plants that process raw material X and yield three outputs: rough nut, natural nut, and flexi nut. The first two outputs are solids, measured in tons, and the third is a liquid, also measured in tons. The company assumes for its costing purposes that all three outputs are jointly produced until a single split off point, at which each output appears separately and is then further processed individually. For April 2019, the following data apply: • Rough-150 tons produced and sold at $ 900 per ton. Separable costs beyond the split off point are S8,750. This produces Rough 1, used by the paper industry. • Natural-50 tons produced and sold at $ 7,500 per ton. Separable costs beyond the split off point are $5,250. This produces Natural 1, used by the construction industry. • Flexi-800 tons produced and sold at $65 per ton. Separable costs beyond the split off point are $10,500. This produces Flexi 1, used in the production of detergents. USC acquired raw material X for $70,000 in April. Operations cost of the plants up to split off point was $20,000. From this same production process, a product of relatively low sales value is also produced, called bendy nut. Bendy is a grainy solid, which can be processed further to earn higher sales, but the company chooses to sell it in its original form, earning from the sheer volume sold. 2,000 tons of bendy were produced in April, and sold in May, at an average price of $120 per ton. Required: a. Draw a diagram showing the joint cost situation for USC. b. Allocate the April 2019 joint cost among the three main products, ignoring Bendy, and using the net realizable value method (NRV). e. Show the operating income for each product using the NRV method. d. Discuss how the 2,000 tons of Bendy will differently affect the income statement if it is accounted for using the production method versus the sales method.
Transcribed Image Text:The Universal Solutions Co. (USC) operates several plants that process raw material X and yield three outputs: rough nut, natural nut, and flexi nut. The first two outputs are solids, measured in tons, and the third is a liquid, also measured in tons. The company assumes for its costing purposes that all three outputs are jointly produced until a single split off point, at which each output appears separately and is then further processed individually. For April 2019, the following data apply: • Rough-150 tons produced and sold at $ 900 per ton. Separable costs beyond the split off point are S8,750. This produces Rough 1, used by the paper industry. • Natural-50 tons produced and sold at $ 7,500 per ton. Separable costs beyond the split off point are $5,250. This produces Natural 1, used by the construction industry. • Flexi-800 tons produced and sold at $65 per ton. Separable costs beyond the split off point are $10,500. This produces Flexi 1, used in the production of detergents. USC acquired raw material X for $70,000 in April. Operations cost of the plants up to split off point was $20,000. From this same production process, a product of relatively low sales value is also produced, called bendy nut. Bendy is a grainy solid, which can be processed further to earn higher sales, but the company chooses to sell it in its original form, earning from the sheer volume sold. 2,000 tons of bendy were produced in April, and sold in May, at an average price of $120 per ton. Required: a. Draw a diagram showing the joint cost situation for USC. b. Allocate the April 2019 joint cost among the three main products, ignoring Bendy, and using the net realizable value method (NRV). e. Show the operating income for each product using the NRV method. d. Discuss how the 2,000 tons of Bendy will differently affect the income statement if it is accounted for using the production method versus the sales method.
Expert Solution
steps

Step by step

Solved in 4 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Decision to Sell before or after additional processing
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS