Question

Simpson Manufacturing Enterprises uses a joint production process that produces three products at the split-off point. Joint production costs during April were $720,000. Product information for April was as follows:

	Product
	R			S					T
Gallons produced		2,500				5,000					7,500
Sales prices per gallon:
At the split-off	$	100			$	80				$	20
After further processing	$	150			$	115				$	30
Costs to process after split-off	$	150,000			$	150,000				$	100,000

Required: (use a separate sheet to show your work and place it in the drop box provided in Blackboard for Test #3) 15 points

• Assume that all three products are main products and that they can be sold at the split-off point or processed further, whichever is economically beneficial to Simpson. Allocate the joint costs to the three products using the Net Realizable Value Method.

   Allocated costs using Net Realizable Value Method to:   a. Product R _______________    b. Product S _________________ c. Product T _____________________

• Assume that Simpson uses the physical quantities method to allocate the joint costs. How much would be allocated to each of the three products?

      Allocated costs using Physical Quantities Method to: d. Product R ________________ e. Product S __________________ f. Product T ______________________

• Refer to the original data.  For each product R, S and T, should the company sell at Split-off point or process further. Indicate by writing SPLIT-OFF or PROCESS FURTHER for each option.

g.  Product R Sell at Split-off or Process Further ?____________________________

h. Product S Sell at Split-off or Process Further ?____________________________

  i.   Product T Sell at Split-off or Process Further ?____________________________

Answer 1