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 14E
Joint cost allocation —net realizable value method
Nature’s Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,304 cubic yards of wood chips, 14,100 cubic yards of mulch, and 9,024 cubic yards of wood pulp. The joint production
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Joint Cost Allocation-Net Realizable Value Method
Nature's Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a
wood chipper machine. One batch of logs produces 20,400 cubic yards of wood chips, 10,400 cubic yards of mulch, and 9,200 cubic yards of wood pulp.
The joint production process costs a total of $34,000 per batch. After the split-off point, wood chips are immediately sold for $25 per cubic yard while wood
pulp and mulch are processed further. The market value of the wood pulp and mulch at the split-off point is estimated to be $22 and $25 per cubic yard,
respectively. The additional production process of the wood pulp costs $5 per cubic yard, after which it is sold for $30 per cubic yard. The additional
production process of the mulch costs $4 per cubic yard, after which it is sold for $27 per cubic yard.
Allocate the joint costs of production to each product using the net realizable value…
Joint Cost Allocation—Physical Units Method
Woodfall, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 100 washed boards, 60 stained boards, and 40 pressure treated boards. The joint production process costs a total of $3,500 per batch.
Using the physical units method, allocate the joint production cost to each product.
Joint Product
Allocation
Washed
$fill in the blank 1
Stained
fill in the blank 2
Pressure treated
fill in the blank 3
Totals
$fill in the blank 4
Joint cost allocation -net realizable value method
Nature's Garden Inc.produces wood chips,wood pulp, and mulch.These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch oflogs produces 20,304 cubicyards of wood chips, 14,100 cubicyardsof mulch,and 9,024 cubic yards of wood pulp.Thejoint production process costs a total of $32,000 per batch.After the split-off point, wood chips are immediately sold for $25 per cubic yard while wood pulp and mulch are processed further. The market value of thewood pulp and mulch at the split-off point is estimated to be $22 and $24 per cubicyard, respectively. The additional production process of thewood pulp costs
$5 per cubic yard, after which it is sold for $30 per cubic yard. The additional production process of the mulch costs
$4 per cubic yard, after which it is sold for $32 per cubic yard. Allocate the jo int costs of production to each product using the net realizable value method.
Chapter 5 Solutions
Managerial Accounting
Ch. 5 - Why are support department costs difficult to...Ch. 5 - Why does support department cost allocation matter...Ch. 5 - What are some drawbacks of applying support...Ch. 5 - Why is the diect method of support department cost...Ch. 5 - How does management determine the order in which...Ch. 5 - Are large or small companies more likely to use...Ch. 5 - What is the main difference between the physical...Ch. 5 - When would management most likely use the net...Ch. 5 - What are the two most often used ways of...Ch. 5 - How can support department and joint cost...
Ch. 5 - Charlies Wood Works produces wood products (e.g.,...Ch. 5 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 5 - Prob. 3BECh. 5 - Blakes Blacksmith Co. produces two types of...Ch. 5 - Garys Grooves Co. produces two types of carving...Ch. 5 - Prob. 6BECh. 5 - Yo-Down Inc. produces yogurt. Information related...Ch. 5 - Prob. 2ECh. 5 - Blue Africa Inc. produces laptops and desktop...Ch. 5 - Christmas Timber, Inc., produces Christmas trees....Ch. 5 - Crystal Scarves Co. produces winter scarves. The...Ch. 5 - Davis Snowflake Co. produces Christmas stockings...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Support department cost allocation comparison...Ch. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Joint cost allocation market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Joint cost allocation-market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Support department cost allocation Blue Mountain...Ch. 5 - Support activity cost allocation Jakes Gems mines...Ch. 5 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 5 - Joint cost allocation Florissas Flowers jointly...Ch. 5 - Support department cost allocation Hooligan...Ch. 5 - Support activity cost allocation Kizzles Crepes...Ch. 5 - Joint cost allocation McKenzies Soap Sensations,...Ch. 5 - Prob. 4PBCh. 5 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 5 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 5 - Prob. 3MADCh. 5 - Prob. 4MADCh. 5 - Joint cost allocation and performance evaluation...Ch. 5 - Prob. 3TIFCh. 5 - Prob. 1CMACh. 5 - Adam Corporation manufactures computer tables and...Ch. 5 - Breegle Company produces three products (B-40,...Ch. 5 - Tucariz Company processes Duo into two joint...
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- Board-It, Inc., produces the following types of 2 4 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of 710 per batch. Using the physical units method, allocate the joint production cost to each product.arrow_forwardJoint cost allocation McKenzies Soap Sensations, Inc., produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process thatcosts 30,000 per batch. Each batch produces 14,800 bottles of morning glory hand soap, 12,000bottles of snowflake sparkle hand soap, and 10,000 bottles of sea breeze hand soap at the split-offpoint. Each product is processed further after the split-off point, but the market value of a bottle ofany of the flavors at this point is estimated to be 1.25 per bottle. The additional processing costsof morning glory, snowflake sparkle, and sea breeze hand soap are 10.50, 0.55, and 0.60 perbottle, respectively. Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for2.00, 2.20, and 2.40 per bottle, respectively. Instructions 1. Using the net realizable value method, allocate the joint costs of production to each product. 2. Explain why McKenzies Soap Sensations, Inc., always chooses to process each varietyof hand soap beyond the split-off point. 3. If demand for all products was the same, which product should McKenzies Soap Sensations, Inc., produce in the highest quantity?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
- 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 castersugar are processed further. The market value of the granulated sugar and caster sugar is estimatedto both be 0.25 at the split-off point. One batch of joint production costs 1,640 and yields 3,000pounds of raw sugar, 3,600 pounds of granulated sugar, and 2,000 pounds of caster sugar at thesplit-off point. Allocate the joint costs of production to each product using the market value atsplit-off method.arrow_forwardJoint Cost Allocation—Physical Units Method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of $710 per batch. Using the physical units method, allocate the joint production cost to each product. Round your answers to two decimal places. Joint Product Allocation Washed $ Stained Pressure treated Totals $arrow_forwardJoint Cost Allocation—Physical Units Method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 45 washed boards, 35 stained boards, and 20 pressure treated boards. The joint production process costs a total of $710 per batch. Using the physical units method, allocate the joint production cost to each product. Round your answers to two decimal places.arrow_forward
- Joint Cost Allocation—Weighted Average Method Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust Wood chips Totalsarrow_forwardJoint Cost Allocation—Weighted Average Method Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Carving Creations accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 3,000 cubic yards of wood chips and 10,000 cubic yards of sawdust, and the estimated cost per batch is $21,400. However, the joint production of each good is not equally weighted. Management at Carving Creations estimates that for the time it takes to produce 10 cubic yards of wood chips in the joint production process, only 2 cubic yards of sawdust are produced. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust $fill in the blank 1 Wood chips fill in the blank 2 Totals $fill in the blank 3arrow_forwardJoint Cost Allocation—Weighted Average Method Custom Carvings Company jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust $fill in the blank 1 Wood chips fill in the blank 2 Totals $fill in the blank 3arrow_forward
- Joint cost allocation — physical units method Board-It, Inc., produces the following types of 2 × 4 × 10 wood boards: washed, stained, and pressure treated. These products are produced jointly until they are cut. One batch produces 50 washed boards, 40 stained boards, and 10 pressure treated boards. The joint production process costs a total of $800 per batch. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. Open spreadsheet Using the physical units method, allocate the joint production cost to each product. Round your answers to the nearest cent. Joint Product Allocation Washed $fill in the blank 2 Stained fill in the blank 3 Pressure treated fill in the blank 4 Totals $fill in the blank 5arrow_forwardJoint Cost Allocation-Physical Units Method Medieval Blacksmith Co. produces two types of decorative swords, a broadsword and a longsword. The swords are made through a joint production process that ultimately produces 30 broadswords and 20 longswords and costs a total of $4,000 per batch. After the split-off point, each type of sword goes through an additional crafting process before it is sold. The additional production process of the broadsword costs $30 per sword, after which it is sold for $180 per sword. The additional production process of the longsword costs $25 per sword, after which it is sold for $150 per sword. Determine the amount of joint production costs allocated to each type of sword using the physical units method. Joint Product Broadsword Longsword Totals Allocation $arrow_forwardJoint Cost Allocation—Physical Units Method Medieval Blacksmith Co. produces two types of decorative swords, a broadsword and a longsword. The swords are made through a joint production process that ultimately produces 42 broadswords and 28 longswords and costs a total of $4,200 per batch. After the split-off point, each type of sword goes through an additional crafting process before it is sold. The additional production process of the broadsword costs $42 per sword, after which it is sold for $174 per sword. The additional production process of the longsword costs $28 per sword, after which it is sold for $148 per sword. Determine the amount of joint production costs allocated to each type of sword using the physical units method. Joint Product Allocation Broadsword $fill in the blank 1 Longsword fill in the blank 2 Totals $fill in the blank 3arrow_forward
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