Florissa's Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same amount of water; daisies require three times as much as lilies, and the water required for tulips is about halfway between the amounts needed for daisies and lilies. Although the lilies and tulips receive more water than they need due to the joint irrigation process, they are not hurt by the overwatering. The joint production cost of the three varieties of flowers is about $30 per harvest. Every harvest yields 10 tulips, 20 lilies, and 20 daisies. Allocate the joint costs of production to each product using the physical units method.
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.
Joint cost allocation
Florissa's Flowers jointly produces three varieties of flowers in the same garden: tulips, lilies, and daisies. The flowers are all watered via the same irrigation system and all receive the same amount of water; daisies require three times as much as lilies, and the water required for tulips is about halfway between the amounts needed for daisies and lilies. Although the lilies and tulips receive more water than they need due to the joint irrigation process, they are not hurt by the overwatering. The joint production cost of the three varieties of flowers is about $30 per harvest. Every harvest yields 10 tulips, 20 lilies, and 20 daisies.
- Allocate the joint costs of production to each product using the physical units method.
|
Joint |
Flowers |
Proportion |
Joint |
Allocation |
|
Tulip |
% |
$ |
$ |
|
|
Lily |
% |
|||
|
Daisy |
% |
|||
|
Totals |
$ |
Which products receive the largest portion of the joint costs?
received the largest portion of the joint costs.
- Allocate the joint costs of production to each product using the weighted average method.
|
Joint |
Flowers |
Weight |
Weighted |
Weighted |
Joint |
Allocation |
|
Tulip |
% |
$ |
$ |
|||
|
Lily |
f% |
|||||
|
Daisy |
% |
|||||
|
Totals |
$ |
Which product receives the largest portion of the joint costs?
received the largest portion of the joint costs.
- Why would it be important to consider the watering process as an appropriate weight factor?
- The cost of watering the plants is a large portion of the joint costs and the company follows the same irrigation system for all three varieties of flowers.
- It is a natural resource which is more precious.
- Daisies have the highest market value.
- None of the above.
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