Question

In: Accounting

1) Rainbow Ltd. manufactures two industrial compounds. In the month of May, 15,000 litres of direct...

1) Rainbow Ltd. manufactures two industrial compounds. In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000. The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton. The respective selling prices of Jarlon and Kharton are $38 and $58. Both products may be processed further. Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product. The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively. The selling price of Jaxton is $48 per jar. The selling price of Kraxton is $102 per jar.

A) Using the sales value at splitoff method, the percentage weightings for joint cost allocations for Jarlon and Kharton respectively are?

B) Using the sales value at splitoff, the joint costs allocated to Jarlon would be?

C) Using the sales value at splitoff method, the joint costs allocated to Kharton would be?

D) Assuming Cranbrook uses the sales value at splitoff method and 2,000 containers of Jarlon and 75 containers of Kharton are unsold at the end of the period, Cranbrook would report ending inventory of?

Solutions

Expert Solution

Required A

Sales Value at Splitoff point of Jarlon for may = 16000 containers * $38 per containers

= $608,000

Sales Value at Splitoff point of Kharton for may = 4000 containers * $58 per containers

= $232,000

Percentage weight of Joint Cost allocated to Jarlon = $608,000 / ($608,000+$232,000) * 100 = 72.38%

Percentage weight of Joint Cost allocated to Kharton = $232,000 / ($608,000+$232,000) * 100 = 27.62%

Required B

Total Joint Cost = $160,000 + $400,000 = $560,000

Joint costs allocated to Jarlon = $560,000* 72.38% = $405,328

Required C

Total Joint Cost = $160,000 + $400,000 = $560,000

Joint costs allocated to Kharton = $560,000* 27.62% = $154,672

Required D

Cost of 2000 containers of Jarlon = $405,328 / 16000 * 2000 = $50,666

Cost of 75 containers of Kharton = $154,672 / 4000 * 75 = $2900

Total Ending Inventory = $50,666 + 2,900 = $53,566

For any clarification, please comment. Kindly Up Vote

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Al Khoud Chem manufactures two industrial chemicals in a joint process. In October, OMR200,000 of direct...
Al Khoud Chem manufactures two industrial chemicals in a joint process. In October, OMR200,000 of direct materials were processed at a cost of OMR300,000, resulting in 16,000 pounds of product P and 4,000 pounds of product G. Product P sells for OMR35 per pound and product G sells for OMR60 per pound. Management generally processes each of these chemicals further in separable processes to manufacture more refined products. Product P is processed separately at a cost of OMR7.50 per pound,...
Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard...
Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 100 liters of its biggest selling product is as follows. Input Quantity Cost Total Chemical (in liters) (per liter) Cost Chem-A 22 $ 13 $ 286 Chem-B 62 14 868 Chem-C 41 20 820 125 $ 1,974 There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put...
Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the...
Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 3 activities. The estimated amount of overhead traceable to the 3 activities for the coming year are given below: Activity Cost driver Cost Product 1 Product 2 Purchase orders # of orders $840347 312 579 Maintenance Machine hours $456759 18555 19721 Inspection # of inspections $718649...
Valdosta Chemical Company manufactures two industrial chemical products in a joint process. In May, 10,000 gallons...
Valdosta Chemical Company manufactures two industrial chemical products in a joint process. In May, 10,000 gallons of input costing $60,000 were processed at a cost of $150,000. The joint process resulted in 8,000 pounds of Resoline and 2,000 pounds of Krypto. Resoline sells for $25 per pound, and Krypto sells for $50 per pound. Management generally processes each of these chemicals further in separable processes to produce more refined chemical products. Resoline is processed separately at a cost of $5...
Anderson Compounds produces two industrial chemical compounds, Gorp and Gumm, from the same process, which last...
Anderson Compounds produces two industrial chemical compounds, Gorp and Gumm, from the same process, which last year, cost $480,000. Anderson produced 20,000 pounds of Gorp, which sells for $60 per gallon and 60,000 gallons of Gumm, which sells for $30 per gallon. After the split-off point, Gorp required additional processing costing $300,000 to make it salable. Using the adjusted sales method, how much of the joint cost should be allocated to Gorp? a. $160,000 b. $120,000 c. $320,000 d. $192,000
The Lifang Wu Corporation manufactures two models of industrial robots, the Alpha 1 and the Beta...
The Lifang Wu Corporation manufactures two models of industrial robots, the Alpha 1 and the Beta 2. The firm employs 5 technicians, working 160 hours each per month, on its assembly line. Management insists that full employment (that is, all 160 hours of time) be maintained for each worker during next month’s operations. It requires 20 labor-hours to assemble each Alpha 1 robot and 25 labor-hours to assemble each Beta 2 model. Wu wants to see at least 10 Alpha...
James Corp. applies overhead on the basis of direct labor hours. For the month of May,...
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels Overhead Budget 80% Production in units 10,000 Standard direct labor hours 36,000 Budgeted overhead Variable overhead costs Indirect materials $ 21,600 Indirect labor 36,000 Power 7,200 Maintenance 3,600 Total variable costs 68,400 Fixed overhead costs Rent of factory building 20,000 Depreciation—Machinery...
James Corp. applies overhead on the basis of direct labor hours. For the month of May,...
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels Overhead Budget 80% Production in units 10,000 Standard direct labor hours 26,000 Budgeted overhead Variable overhead costs Indirect materials $ 15,600 Indirect labor 26,000 Power 7,800 Maintenance 2,600 Total variable costs 52,000 Fixed overhead costs Rent of factory building 22,000 Depreciation—Machinery...
James Corp. applies overhead on the basis of direct labor hours. For the month of May,...
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels Overhead Budget 80% Production in units 10,000 Standard direct labor hours 30,000 Budgeted overhead Variable overhead costs Indirect materials $ 21,000 Indirect labor 30,000 Power 6,000 Maintenance 3,000 Total variable costs 60,000 Fixed overhead costs Rent of factory building 14,000 Depreciation—Machinery...
James Corp. applies overhead on the basis of direct labor hours. For the month of May,...
James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 10,000 units (80% of its production capacity of 12,500 units) and prepared the following overhead budget: Operating Levels Overhead Budget 80% Production in units 10,000 Standard direct labor hours 27,000 Budgeted overhead Variable overhead costs Indirect materials $ 16,200 Indirect labor 27,000 Power 5,400 Maintenance 5,400 Total variable costs 54,000 Fixed overhead costs Rent of factory building 23,000 Depreciation—Machinery...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT