Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis. To Calculate: Requirement 1: Allocated cost of sold items

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Answer 1

Question

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Answer 2

Question

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

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Answer 3

Question

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

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Answer 4

Question

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

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Answer 5

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

Answer 6

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

Answer 7

Chapter 24, Problem 20E

To determine

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

Answer 8

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of Lobster Tail = $8631

Allocated cost of Lobster Flakes = $1701

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Allocated cost to sold items = Units Sold x Cost per pound

$\begin{array}{l} L o b s t e r T a i l = $ 7.875 x 1096 = $ 8631 \\ L o b s t e r F l a k e s = $ 5.25 x 324 = $ 1701 \end{array}$

Answer 13

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

Answer 14

To determine

To Calculate:

Requirement 2: Allocated cost of ending inventory

Answer 15

Expert Solution

Answer to Problem 20E

Solution:

Allocated cost of ending inventory of Lobster Tail = $1197

Allocated cost of ending inventory of Lobster Flakes = $1071

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Ending Inventory = Purchased – Sold

$\begin{array}{l} E n d i n g I n v e n t o r y o f L o b s t e r T a i l = (52 x 24) - 1096 = 152 p o u n d s \\ E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = (22 x 24) - 324 = 204 p o u n d s \end{array}$

Cost of ending inventory = Ending Inventory x Cost per pound

$\begin{array}{l} C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r T a i l = 152 x 7.875 = $ 1197 \\ C o s t o f E n d i n g I n v e n t o r y o f L o b s t e r F l a k e s = 204 x 5.25 = $ 1071 \end{array}$

Total or Joint Cost

$\begin{array}{l} T o t a l C o s t = P u r c h a s i n g c o s t + P r o c e s s i n g C o s t \\ = (2400 x 4.50) + 1800 \\ = $ 12, 600 \end{array}$

Market Value

$\begin{array}{l} M V o f l o b s t e r t a i l = 52 x 24 x 21 = $ 26208 \\ M V o f l o b s t e r f l a k e s = 22 x 24 x 14 = $ 7392 \\ T o t a l M a r k e t V a l u e = 26208 + 7392 = $ 33600 \end{array}$

Percentage of Market Value

$\begin{array}{l} L o b s t e r t a i l = 26208 / 33600 = 78 % \\ L o b s t e r f l a k e s = 7392 / 33600 = 22 % \end{array}$

Allocation of Joint Cost

$\begin{array}{l} L o b s t e r t a i l = 78 % o f 12600 = $ 9828 \\ L o b s t e r f l a k e s = 22 % o f 12600 = $ 2772 \end{array}$

Cost per Pound

$\begin{array}{l} L o b s t e r T a i l = 9828 / 1248 = $ 7.875 \\ L o b s t e r F l a k e s = 2772 / 528 = $ 5.25 \end{array}$

Answer 20

Ch. 24 - Prob. 1DQ Ch. 24 - What is the difference between operating...Ch. 24 - What are controllable costs?Ch. 24 - Prob. 4DQ Ch. 24 - Prob. 5DQ Ch. 24 - Prob. 6DQ Ch. 24 - Prob. 7DQ Ch. 24 - What is the difference between direct and indirect...Ch. 24 - Prob. 9DQ Ch. 24 - Prob. 10DQ

Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis. To Calculate: Requirement 1: Allocated cost of sold items

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis. To Calculate: Requirement 1: Allocated cost of sold items

Answer to Problem 20E

Explanation of Solution

To Calculate: Requirement 2: Allocated cost of ending inventory

Answer to Problem 20E

Explanation of Solution

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Chapter 24 Solutions

Introduction: Joint costs are the costs that benefit more than one product or process in the manufacturing process. The joint cost can be allocated either on physical basis or on value basis.

To Calculate:

Requirement 1: Allocated cost of sold items

To Calculate:

Requirement 2: Allocated cost of ending inventory