COST ACCOUNTING
16th Edition
ISBN: 9781323694008
Author: Horngren
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 16, Problem 16.21E
Joint-cost allocation, insurance settlement. Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2017 is as follows:
| Parts | Pounds of Product | Wholesale Selling Price per Pound When Production Is Complete |
| Breasts | 100 | $0.55 |
| Wings | 20 | 0.20 |
| Thighs | 40 | 0.35 |
| Bones | 80 | 0.10 |
| Feathers | 10 | 0.05 |
Joint cost of production in July 2017 was $50.
A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire. Quality Chicken’s insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is assumed to be at the end of the production process.
- 1. Compute the cost of the special shipment destroyed using the following:
Required
- a. Sales value at splitoff method
- b. Physical-measure method (pounds of finished product)
- 2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts.
Information pertaining to production in July 2020 follows:
(Click the icon to view the information.)
Joint cost of production in July 2020 was $50.
Data table
Parts
Breasts
Wings
Thighs
Bones
Feathers
Pounds of Wholesale Selling Price per Pound
Product When Production is Complete
100 $
20
40
80
10
Print
Done
0.55
0.20
0.35
0.10
0.05
X
A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire.
Quality Chicken's insurance policy provides reimbursement for the cost of the items destroyed. The
insurance company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is
assumed to be at the end of the production process.
Read the requirements.
Requirements
1. Compute the cost of the special shipment destroyed using the following:
a. Sales value at splitoff method
b. Physical-measure method (pounds of finished product)
2. What…
The JYD Company processes apples into pies, spread, and dressing. During the second quarter of 2021, the joint cost of processing the apples was P750,000. There were no beginning inventories for the quarter. Production and sales value information for the quarter were as follows: Assume the use of the estimated net realizable value method.
Products Units Produced SV @ split-off Separable costs Final Selling Price Ending Units
Pies 20,000 P12/unit P20/unit P35/unit 7,000
Spread 50,000 15/unit 10/unit 28/unit 24,000
Dressing 25,000 9/unit 8/unit 20/unit 10,000
The allocated joint cost for product Pies at the end of the quarter is:
Group of answer choices
b. P450,000
a. P150,0000
d. Not given
c. P250,000
The JYD Company processes apples into pies, spread, and dressing. During the second quarter of 2021, the joint cost of processing the apples was P750,000. There were no beginning inventories for the quarter. Production and sales value information for the quarter were as follows: Assume the use of the estimated net realizable value method.
Products Units Produced SV @ split-off Separable costs Final Selling Price Ending Units
Pies 20,000 P12/unit P20/unit P35/unit 7,000
Spread 50,000 15/unit 10/unit 28/unit 24,000
Dressing 25,000 9/unit 8/unit 20/unit 10,000
The allocated joint cost for product Dressing at the end of the quarter is:
Group of answer choices
c. P150,000
a. P250,0000
d. Not given
b. P450,000
Chapter 16 Solutions
COST ACCOUNTING
Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7QCh. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...
Ch. 16 - Why is the constant gross-margin percentage NRV...Ch. 16 - Managers must decide whether a product should be...Ch. 16 - Prob. 16.13QCh. 16 - Describe two major methods to account for...Ch. 16 - Why might managers seeking a monthly bonus based...Ch. 16 - Prob. 16.16MCQCh. 16 - Joint costs of 8,000 are incurred to process X and...Ch. 16 - Houston Corporation has two products, Astros and...Ch. 16 - Dallas Company produces joint products, TomL and...Ch. 16 - Earls Hurricane Lamp Oil Company produces both A-1...Ch. 16 - Joint-cost allocation, insurance settlement....Ch. 16 - Joint products and byproducts (continuation of...Ch. 16 - Net realizable value method. Sweeney Company is...Ch. 16 - Alternative joint-cost-allocation methods,...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Prob. 16.26ECh. 16 - Joint-cost allocation, sales value, physical...Ch. 16 - Joint-cost allocation: Sell immediately or process...Ch. 16 - Accounting for a main product and a byproduct....Ch. 16 - Joint costs and decision making. Jack Bibby is a...Ch. 16 - Joint costs and byproducts. (W. Crum adapted)...Ch. 16 - Methods of joint-cost allocation, ending...Ch. 16 - Alternative methods of joint-cost allocation,...Ch. 16 - Comparison of alternative joint-cost-allocation...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Joint-cost allocation. SW Flour Company buys 1...Ch. 16 - Further processing decision (continuation of...Ch. 16 - Joint-cost allocation with a byproduct. The...Ch. 16 - Byproduct-costing journal entries (continuation of...Ch. 16 - Joint-cost allocation, process further or sell....Ch. 16 - Prob. 16.41PCh. 16 - Prob. 16.42PCh. 16 - Methods of joint-cost allocation, comprehensive....
Knowledge Booster
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
- The JYD Company processes apples into pies, spread, and dressing. During the second quarter of 2021, the joint cost of processing the apples was P750,000. There were no beginning inventories for the quarter. Production and sales value information for the quarter were as follows: Assume the use of the estimated net realizable value method. Products Units Produced SV @ split-off Separable costs Final Selling Price Ending Units Pies 20,000 P12/unit P20/unit P35/unit 7,000 Spread 50,000 15/unit 10/unit 28/unit 24,000 Dressing 25,000 9/unit 8/unit 20/unit 10,000 The total value of ending inventory at the end of the quarter is: Group of answer choices b. P1,140,000 d. P788,500 c. P721,500 a. P750,000arrow_forwardOlympic Foods Company uses a standard cost system to collect costs related to the production of its tomato flavored cooking sauce. The tomato (materials) standards for each jar of sauce produced are 0.8 kg of tomato at a standard cost of $2.30 per kg. During the month of June, Olympic purchased 75,000 kgs of tomato at a total cost of $171,000. Olympic used 64,000 of these kgs to produce 71,500 jars of tomato sauce. What is Olympic's materials price variance for the month of June? Use the information given in Question No. 1 to calculate Olympic's materials quantity variance for the month of June.arrow_forwardVandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 50,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $52 $15 Unit variable cost $12 $9 Direct fixed cost $25,200 $48,000 Common fixed selling and administrative expenses total $78,000.See screenshotsarrow_forward
- Rogers Rods & Reels Ltd. manufactures and sells various types of fishing equipment. At the end of 2011, Rogers had estimated for the production and sale of 15,000 bass fishing rods. Each rod has a standard calling for 1.5 pounds of direct material at a standard rate of $800 per pound and 15 minutes of direct labor time at a standard rate of $.18 per minute. During 2012, Rogers actually produced and sold 16,000 rods. These 16,000 rods had an actual direct materials cost of $179,200 (25,600 pounds at $7.00 per pound) and an actual direct labor cost of $44,800 (224,000 minutes at $.20 per minute). Each rod sells for $50. Refer to the Rogers Rods & Reels Ltd. information above. What is Rogers' flexible budget variance? О 11,200 F О011,200 U 3,500 F 3,500 Uarrow_forwardOtto Inc. specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery chains. Chickens are accounted for in batches of 50,000. At the end of each growing period, the chickens are separated and sold by grades. Grades AA and A are sold to large grocery chains, and B and C are sold to other buyers. For costing purposes, Otto treats each batch of chicks as a joint product. The cost data for a batch of 50,000 chicks follow: Total joint costs for the batch were 125,000. Required: Compute the cost allocations for each product, using the sales value at split-off method. (Round sales value percentages to five decimal places.)arrow_forwardRampUp Storage Containers produces a 1,000-cubic-foot metal storage unit that is used by storage companies and other businesses needing low-cost, mobile storage units. The units sell for $3,000 per unit. The company uses a standard costing system. At the start of 2016, standard costs were set as follows: Standard cost per unit: $1,200 Material cost (6 prefabricated metal sheets × $200) Direct labor (10 hours × $20) 200 Overhead ($500 per unit) 500 Total $1,900 The overhead rate was calculated as follows: At the start of 2016, the company estimated that it would produce and sell 5,000 units and incur $500,000 of variable overhead costs and $2,000,000 of fixed overhead costs: Variable overhead Fixed overhead $ 500,000 2,000,000 2,500,000 5,000 Total Divided by estimated production Overhead cost per unit $ 500 Based on estimated sales, standard costs, and other information, the following budget was pre- pared: 2016 Budget (Expected Production and Sales of 5,000 Units) Sales $15,000,000…arrow_forward
- Premium Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018, using 144,000 square feet of extruded vinyl purchased at $1.05 per square foot. Production required 460 direct labor hours that cost $15.50 per hour. The direct materials standard was seven square feet of vinyl per fender, at a standard cost of $1.10 per square foot. The labor standard was 0.025 direct labor hour per fender, at a standard cost of $14.50 per hour. Read the requirement LOADING... . Begin with the cost variances. Select the required formulas, compute the cost variances for direct materials and direct labor, and identify whether each variance is favorable (F) or unfavorable (U).(Abbreviations used: AC = actual cost; AQ = actual quantity; FOH = fixed overhead; SC = standard cost; SQ = standard quantity.) Formula Variance Direct materials cost variance = (AC - SC) x AQ = Direct labor cost…arrow_forwardIbri Company, a manufacturer of stereo systems, started its production in January 2018. For the preceding 3 years had been a retailer of stereo systems. After a thorough survey of stereo system markets, Ibri Company decided to turn its retail store into a stereo equipment factory. Raw materials cost for a stereo system will total $77 per unit. Workers on the production lines are on average paid $11 per hour. A stereo system usually takes 4 hours to complete. In addition, the rent on the equipment used to assemble stereo systems amounts to $5,200 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000. Factory janitorial costs are $1,000 monthly. Advertising costs for the stereo system will be $5,000 per month. The factory building depreciation expense is $8,400 per year. Property taxes on the factory building will be $12,000 per year. Instructions Prepare an answer sheet with the following column headings. Cost…arrow_forwardPillows makes decorative throw pillows for home use. The company sells the pillows to home décor retailers for $ 11 per pillow. Each pillow requires 1.20 yards of fabric, which the company obtains at a cost of $ 6 per yard. The company would like to maintain an ending stock of fabric equal to 20% of the next month's production requirements. The company would also like to maintain an ending stock of finished pillows equal to 25% of the next month's sales. Sales (in units) are projected to be as follows for the first three months of the year: More info: January.........140,000 February........180,000 March...........190,000 Requirement 1. Prepare the sales budget, including a separate section that details the type of sales made. For this section, assume that 10% of the company's pillows are cash sales, and the remaining 90% are sold on credit terms. (Round your answers to the nearest whole number.) Pillows…arrow_forward
- Saved Bandar Industries manufactures sporting equipment. One of the company's products is a football helmet that requires special plastic. During the quarter ending June 30, the company manufactured 3,600 helmets, using 2,592 kilograms of plastic. The plastic cost the company $17,107. According to the standard cost card, each helmet should require 0.65 kilograms of plastic, at a cost of $7.00 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,600 helmets? 2. What is the standard materials cost allowed (SQ x SP) to make 3,600 helmets? 3. What is the materials spending variance? 4. What Is the materials price varlance and the materials quantity variance? 1:35 ed ok (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) nt. ences, 1. Standard…arrow_forwardPlease help me. Thankyou.arrow_forwardRobo-Lawn is a lean manufacturer of robotic lawn mowers. Each mower requires $250 of raw materials. Estimated conversion costs to produce 2,000 units in the next year are $800,000. 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 mowers on credit, and (d) cost of goods sold and finished goods inventory.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY