Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 7, Problem 27E
Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 14,000 units of overs and 36,000 units of unders were produced. Separable
Required:
- 1. Allocate the $50,000 joint costs using the estimated net realizable value method.
- 2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sell overs at split-off or process them further? Show supporting computations.
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Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs ofthis process were $50,000, and 14,000 units of overs and 36,000 units of unders were produced.Separable processing costs beyond the split-off point were as follows: overs, $18,000; unders,$23,040. Overs sell for $2.00 per unit; unders sell for $3.14 per unit.Required:1. Allocate the $50,000 joint costs using the estimated net realizable value method.2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sellovers at split-off or process them further? Show supporting computations.
Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $77,300, and 14,000 units of ins and 36,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: ins, $17,500; outs, $9,000. Ins sell for $8.00 per unit; outs sell for $15.00 per unit.
Required:
Allocate the $77,300 joint costs using the estimated net realizable value method.
Suppose that ins could be sold at the split-off point for $7.00 per unit. Should Arvin sell ins at split-off or process them further? Show supporting computations. Which of the four data analytic types—descriptive, diagnostic, predictive, or prescriptive—is used to determine whether Arvin should process further or sell at the split-off point?
Jorioz Co makes joint products X and Y. $120,000 joint processing costs are incurred.
At the split-off point, 10,000 units of X and 9,000 units of Y are produced, with selling prices of $1.20 for X and $1.50 for Y.
The units of X could be processed further to make 8,000 units of product Z. The extra costs incurred in this process would be fixed costs of $1,600 and variable costs of $0.50 per unit of input.
The selling price of Z would be $2.25.
What would be the outcome if product X is further processed?
O $600 loss
$400 gain
O $3,900 gain
O $1,600 loss
Chapter 7 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 7 - Describe the two-stage allocation process for...Ch. 7 - Why must support service costs be assigned to...Ch. 7 - Explain how allocation of support service costs is...Ch. 7 - Prob. 4DQCh. 7 - Explain how allocating support service costs will...Ch. 7 - Prob. 6DQCh. 7 - Explain why it is better to allocate budgeted...Ch. 7 - Why is it desirable to allocate variable costs and...Ch. 7 - Explain why either normal or peak capacity of the...Ch. 7 - Explain why variable bases should not be used to...
Ch. 7 - Prob. 11DQCh. 7 - Explain the difference between the direct method...Ch. 7 - The reciprocal method of allocation is more...Ch. 7 - What is a joint cost? How does it relate to...Ch. 7 - How do joint costs differ from other common costs?Ch. 7 - The expected costs for the Maintenance Department...Ch. 7 - Prob. 2CECh. 7 - Valron Company has two support departments, Human...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3. Now assume that...Ch. 7 - Refer to Cornerstone Exercise 7.3 and solve for...Ch. 7 - Orchard Fresh, Inc., purchases apples from local...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - Refer to Cornerstone Exercise 7.7. Assume that...Ch. 7 - A company manufactures three products, L-Ten,...Ch. 7 - Refer to Cornerstone Exercise 7.10. (Round...Ch. 7 - Classify each of the following departments in a...Ch. 7 - Prob. 13ECh. 7 - Identify some possible causal factors for the...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Kumar, Inc., evaluates managers of producing...Ch. 7 - Refer to the data in Exercise 7.18. When the...Ch. 7 - Jasmine Company manufactures both pesticide and...Ch. 7 - Refer to the data in Exercise 7.20. The company...Ch. 7 - Eilers Company has two producing departments and...Ch. 7 - Refer to the data in Exercise 7.22. The company...Ch. 7 - Refer to the data in Exercise 7.22. The support...Ch. 7 - Alomar Company manufactures four products from a...Ch. 7 - Refer to Exercise 7.25 and allocate the joint...Ch. 7 - Pacheco, Inc., produces two products, overs and...Ch. 7 - Minor Co. has a job order cost system and applies...Ch. 7 - A CPA would recommend changing from plantwide...Ch. 7 - A company uses charging rates to allocate service...Ch. 7 - Chester Company provided information on overhead...Ch. 7 - Which of the following statements is true? a. The...Ch. 7 - Biotechtron, Inc., has two research laboratories...Ch. 7 - AirBorne is a small airline operating out of...Ch. 7 - Duweynie Pottery, Inc., is divided into two...Ch. 7 - Macalister Corporation is developing departmental...Ch. 7 - Prob. 37PCh. 7 - Welcome Inns is a chain of motels serving business...Ch. 7 - Sonimad Sawmill, Inc. (SSI), purchases logs from...Ch. 7 - Prob. 40P
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