Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 5, Problem 4PB
a.
To determine
Compute the amount of joint production costs allocated to each product using the physical unit’s method.
b.
To determine
Compute the amount of joint production costs allocated to each product using the weighted average method.
c.
To determine
Explain whether the cost of the type of fertilizer used is an appropriate weight factor.
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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 Product
Flowersper Harvest
Proportion
Joint Costs
Allocation
Tulip
%
$
$
Lily
%
Daisy
%
Totals
$
Which products receive the largest portion of the joint costs?
received…
Joint Cost Allocation—Net Realizable Value Method
Lily’s Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of $30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade, and 21 cups of raspberry lemonade. After the split-off point, all three lemonades can be sold for $0.80 per cup, but strawberry and raspberry lemonade can be processed further by adding artificial coloring and flavoring and sold for $0.95 and $1.00 per cup, respectively. It is estimated that these additional processing costs are $0.75 and $1.80 per batch for strawberry and raspberry lemonade, respectively.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product
Allocation
Pure lemonade
$
Strawberry lemonade
Raspberry lemonade
Totals
$
Joint Cost Allocation-Net Realizable Value Method
Lily's Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of
$30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade, and 21 cups of raspberry lemonade. After the split-off point, all three
lemonades can be sold for $0.80 per cup, but strawberry and raspberry lemonade can be processed further by adding artificial coloring and flavoring and sold for $0.95
and $1.00 per cup, respectively. It is estimated that these additional processing costs are $0.75 and $1.80 per batch for strawberry and raspberry lemonade, respectively.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product
Pure lemonade
Strawberry lemonade
Raspberry lemonade
Totals
Allocation
Chapter 5 Solutions
Managerial Accounting
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- Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is twice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process. 1. Using the physical units method, allocate the joint costs of production to each product. Round your answers to two decimal places. JointProduct Rosesper Harvest Proportion JointCosts Allocation Red roses fill in the blank 1 fill in the blank 2% $fill in the blank 3 $fill in the blank 4 White roses fill in the blank 5 fill in the blank 6% fill in the blank 7 fill in the blank 8 Peach roses fill in the blank 9 fill in the blank 10% fill in the blank 11…arrow_forwardRosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregate cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is twice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process. 1. Using the physical units method, allocate the joint costs of production to each product. 2. Using the weighted average method, allocate the joint costs of production to each product. 3. Is the cost of the type of fertilizer required by each type of rose a good weight factor?arrow_forwardJoint cost allocation Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of 250 per batch. At the split-off point, one batchproduces 80, 40, and 25 bottles of hand, body, and foot lotion, respectively. After the split-off point,hand lotion is sold immediately for 2.50 per bottle. Body lotion is processed further at an additional cost of 0.25 per bottle and then sold for 5.75 per bottle. Foot lotion is processed further atan additional cost of 0.85 per bottle and then sold for 4.00 per bottle. Assume that body and footlotion could be sold at the split-off point for 3.00 and 3.20 per bottle, respectively. Instructions 1. Using the market value at split-off method, allocate the joint costs of production to each product. 2. Based on the information provided and your answer to part (1), should Lovely LotionInc. continue processing body and foot lotion after the split-off point? 3. Allocate the joint costs of production to each product using the net realizable value method.arrow_forward
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