Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 5, Problem 13E
Joint cost allocation —market value at split-off method
Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar are processed further. The market value of the granulated sugar and caster sugar is estimated to both be $0.25 at the split-off point. One batch of joint production costs $1,640 and yields 3,000 pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at the split-off point. Allocate the joint costs of production to each product using the market value at split-off method.
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Joint Cost Allocation—Market Value at Split-off Method
Sugar Sweetheart, Inc., jointly produces raw sugar, granulated sugar, and caster sugar. After the split-off point, raw sugar is immediately sold for $0.20 per pound, while granulated and caster sugar are processed further. The market value of the granulated sugar and caster sugar is estimated to both be $0.25 at the split-off point. One batch of joint production costs $1,640 and yields 3,000 pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at the split-off point.
Allocate the joint costs of production to each product using the market value at split-off method.
Joint Product
Allocation
Raw sugar
$fill in the blank 1
Granulated sugar
fill in the blank 2
Caster sugar
fill in the blank 3
Totals
$fill in the blank 4
Joint Cost Allocation—Market Value at Split-off Method
Burn-on Inc. processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $15,800. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
Product
Unit Price
Gasoline
$2 per gallon
Diesel
1 per gallon
Kerosene
3 per gallon
Using the market value at split-off method, allocate the $15,800 joint cost of production to each product.
Joint Product
Allocation
Gasoline
$fill in the blank 1
Diesel
fill in the blank 2
Kerosene
fill in the blank 3
Totals
$fill in the blank 4
Joint Cost Allocation—Market Value at Split-off Method
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $12,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
Gasoline
$2 per gallon
Diesel
1 per gallon
Kerosene
3 per gallon
Using the market value at split-off method, allocate the $12,000 joint cost of production to each product.
Joint Product
Allocation
Gasoline
$
Diesel
Kerosene
Totals
$
Chapter 5 Solutions
Managerial Accounting
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