Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 19, Problem 6BE
Man O’Fort Inc. produces two different styles of door handles, standard and
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Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 30 12-gauge shotguns and 20 20-gauge shotguns and costs a total of $4,000 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs $30 per gun, after which it is sold for $180 per gun. The additional production process of the 20-gauge shotgun costs $25 per gun, after which it is sold for $150 per gun. Determine the amount of joint production costs allocated to each type of shotgun using the physical units method.
Test Company produces two products from a common input: Product A and Product B. One batch of the common input yields 600 units of Product A
and 200 units of Product B. The joint costs for one batch are $25,000. Product A can be sold at the split-off point for $80 per unit. Product B can be
sold at the split-off point for $150 per unit. Alternatively, Product B can be processed into 120 units of Product C that will sell for $400 per unit.
Additional process costs for one batch of Product C will be $5,500
Determine the increase (decrease) in income if Product B is processed further into Product C.
Note: Give your answer using dollar signs and commas but not decimal points (cents) Give negative numbers in parentheses.
Example: $12,345 or S(12,345)
The Killian Company manufactures two skin care lotions, Liquid Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $420,000 for a standard production run that generates 180,000 gallons of Liquid Skin and 120,000 gallons of Silken Skin. Liquid Skin sells for $2.40 per gallon while Silken Skin sells for $3.90 per gallon.
Assuming both products are sold at the split-off point, the amount of joint cost of each production run allocated to Liquid Skin on a net realizable value is?
If there are additional costs are incurred after the split-off point, the amount of joint cost of each production run allocated to Silken Skin on a physical-quantity basis is?
Chapter 19 Solutions
Financial And Managerial Accounting
Ch. 19 - Why are support department costs difficult to...Ch. 19 - Why does support department cost allocation matter...Ch. 19 - What are some drawbacks of applying support...Ch. 19 - Why is the diect method of support department cost...Ch. 19 - How does management determine the order in which...Ch. 19 - Are large or small companies more likely to use...Ch. 19 - What is the main difference between the physical...Ch. 19 - When would management most likely use the net...Ch. 19 - What are the two most often used ways of...Ch. 19 - How can support department and joint cost...
Ch. 19 - Charlies Wood Works produces wood products (e.g.,...Ch. 19 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 19 - Brewster Toymakers Inc. produces toys for...Ch. 19 - Prob. 4BECh. 19 - Garys Grooves Co. produces two types of carving...Ch. 19 - Man OFort Inc. produces two different styles of...Ch. 19 - Yo-Down Inc. produces yogurt. Information related...Ch. 19 - Snowy River Stallion Inc. produces horse and...Ch. 19 - Blue Africa Inc. produces laptops and desktop...Ch. 19 - Christmas Timber, Inc., produces Christmas trees....Ch. 19 - Crystal Scarves Co. produces winter scarves. The...Ch. 19 - Davis Snowflake Co. produces Christmas stockings...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Becker Tabletops has two support departments...Ch. 19 - Support department cost allocation comparison...Ch. 19 - Board-It, Inc., produces the following types of 2 ...Ch. 19 - Prob. 12ECh. 19 - Joint cost allocation market value at split-off...Ch. 19 - Joint cost allocation net realizable value method...Ch. 19 - Big Als Inc. produces and sells various cuts of...Ch. 19 - Gordons Smoothie Stand makes three types of...Ch. 19 - Joint cost allocation-market value at split-off...Ch. 19 - Joint cost allocation net realizable value method...Ch. 19 - Support department cost allocation Blue Mountain...Ch. 19 - Support activity cost allocation Jakes Gems mines...Ch. 19 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 19 - Joint cost allocation Florissas Flowers jointly...Ch. 19 - Support department cost allocation Hooligan...Ch. 19 - Support activity cost allocation Kizzles Crepes...Ch. 19 - Joint cost allocation McKenzies Soap Sensations,...Ch. 19 - Joint cost allocation Rosies Roses produces three...Ch. 19 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 19 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 19 - Prob. 3MADCh. 19 - Analyze Williams Ball Jersey Shop Williams Ball ...Ch. 19 - Prob. 1TIFCh. 19 - Prob. 3TIFCh. 19 - Logo Inc. has two data services departments...Ch. 19 - Adam Corporation manufactures computer tables and...Ch. 19 - Breegle Company produces three products (B-40,...Ch. 19 - Tucariz Company processes Duo into two joint...
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- Blakes Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 30 12-gauge shotguns and 20 20-gauge shotguns and costs a total of 4,000 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs 30 per gun, after which it is sold for 180 per gun. The additional production process of the 20-gauge shotgun costs 25 per gun, after which it is sold for 150 per gun. Determine the amount of joint production costs allocated to each type of shotgun using the physical units method.arrow_forwardVollmer Manufacturing makes three components for sale to refrigeration companies. The components are processed on two machines: a shaper and a grinder. The times (in minutes) required on each machine are as follows: The shaper is available for 120 hours, and the grinder for 110 hours. No more than 200 units of component 3 can be sold, but up to 1,000 units of each of the other components can be sold. In fact, the company already has orders for 600 units of component 1 that must be satisfied. The profit contributions for components 1, 2, and 3 are 8, 6, and 9, respectively. a. Formulate and solve for the recommended production quantities. b. What are the objective coefficient ranges for the three components? Interpret these ranges for company management. c. What are the right-hand-side ranges? Interpret these ranges for company management. d. If more time could be made available on the grinder, how much would it be worth? e. If more units of component 3 can be sold by reducing the sales price by 4, should the company reduce the price?arrow_forwardBox Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $25 per unit and $40 s used in direct labor, while the direct material for the double is $40 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 9,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?arrow_forward
- Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?arrow_forwardTucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in 1,000-gallon drums for 2.000. Processing costs are 3,000 to process the 1,000 gallons of Duointo 800 gallons of Big and 200 gallons of Mini. The selling price is 9 per gallon for Big and4 per gallon for Mini. If the physical units method is used to allocate joint costs to the finalproducts, the total cost allocated to produce Mini is: a. 500. b. 4,000. c. 1,000. d. 4,500.arrow_forwardTaylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio and Maslimpio. Pocolimpio uses two quarts of the chemical for every unit produced, and Maslimpio uses five quarts. Currently, Taylor has 6,000 quarts of the material in inventory. All of the material is imported. For the coming year, Taylor plans to import 6,000 quarts to produce 1,000 units of Pocolimpio and 2,000 units of Maslimpio. The detail of each products unit contribution margin is as follows: Taylor Company has received word that the source of the material has been shut down by embargo. Consequently, the company will not be able to import the 6,000 quarts it planned to use in the coming years production. There is no other source of the material. Required: 1. Compute the total contribution margin that the company would earn if it could import the 6,000 quarts of the material. 2. Determine the optimal usage of the companys inventory of 6,000 quarts of the material. Compute the total contribution margin for the product mix that you recommend. 3. Assume that Pocolimpio uses three direct labor hours for every unit produced and that Maslimpio uses two hours. A total of 6,000 direct labor hours is available for the coming year. a. Formulate the linear programming problem faced by Taylor Company. To do so, you must derive mathematical expressions for the objective function and for the materials and labor constraints. b. Solve the linear programming problem using the graphical approach. c. Compute the total contribution margin produced by the optimal mix.arrow_forward
- Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profits increase if 200 more hours of machine time can be obtained?arrow_forwardAndalus Furniture Company has two manufacturing plants, one at Aynor and another at Spartanburg. The cost in dollars of producing a kitchen chair at each of the two plants is given here. The cost of producing Q1 chairs at Aynor is: 75Q1+5Q12+100 and the cost of producing Q2 kitchen chairs at Spartanburg is: 25Q2+2.5Q22+150. Andalus needs to manufacture a total of 40 kitchen chairs to meet an order just received. How many chairs should be made at Aynor, and how many should be made at Spartanburg in order to minimize total production cost?arrow_forwardPatz Company produces two types of machine parts: Part A and Part B, with unit contribution margins of 300 and 600, respectively. Assume initially that Patz can sell all that is produced of either component. Part A requires two hours of assembly, and B requires five hours of assembly. The firm has 300 assembly hours per week. Required: 1. Express the objective of maximizing the total contribution margin subject to the assembly-hour constraint. 2. Identify the optimal amount that should be produced of each machine part and the total contribution margin associated with this mix. 3. What if market conditions are such that Patz can sell at most 75 units of Part A and 60 units of Part B? Express the objective function with its associated constraints for this case and identify the optimal mix and its associated total contribution margin.arrow_forward
- Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-0. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,750 after processing costs of $33,000. A batch of ALT-2 can be sold for $240,300 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Note: Do not round intermediate calculations.arrow_forwardTucariz Company processes Duo into two joint products, Big and Mini. Duo is purchase in 1,000-gallon drums for $2,000. Processing costs are $3,000 to process the 1,000 gallons of Duo into 800 gallons of Big and 200 gallons of Mini. The selling price is $9 per gallon for Big and $4 per gallon for Mini. If the sales value at split-off method is used to allocate joint costs to the final products, the per-gallon cost (rounded to the nearest cent) of producing Big is Select one: a. $5.00 per gallon. b. $5.63 per gallon. c. $4.50 per gallon. X d. $3.38 per gallon.arrow_forwardGunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Processing cost hsarrow_forward
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