Chapter 16, Problem 16.36P

Joint-cost allocation. SW Flour Company buys 1 Input of standard flour and refines it using a special sifting process to 3 cups of baking flour and 9 cups of bread flour. In May 2017, SW bought 12,000 inputs of flour for $89,000. SW spent another $47,800 on the special sifting process.

The baking flour can be sold for $3.60 per cup and the bread flour for $4.80 per cup.

SW puts the baking flour through a second process so it is super fine. This costs an additional $1.00 per cup of baking flour and the process yields ½ cup of super-fine baking flour for every one cup of baking flour used. The super-fine baking flour sells for $9.60 per cup.

1. 1. Allocate the $136,800 joint cost to the super-fine baking flour and the bread flour using the following:

  Required

1. a. Physical-measure method (using cups) of joint-cost allocation
2. b. Sales value at splitoff method of joint-cost allocation
3. c. NRV method of joint-cost allocation
4. d. Constant gross-margin percentage NRV method of joint-cost allocation