Question
In: Accounting
In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses....
In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses.
Joint cost is allocated on the basis of relative sales value at split-off. The company can choose to process each of the products further rather than sell the fabric at split-off. Information related to these products follows.
| Dresses | Jackets | Blouses | Total | |
|---|---|---|---|---|
| Number of units produced | 16,000 | 25,600 | 9,600 | 51,200 |
| Joint cost allocated | ? | $220,800 | ? | $576,000 |
| Sales values at split-off point | ? | $368,000 | $128,000 | $960,000 |
| Additional costs of processing further | $41,600 | $32,000 | $124,800 | $198,400 |
| Sales values after all processing | $480,000 | $428,800 | $336,000 | $1,244,800 |
a. What amount of joint cost should be allocated to dresses and blouses?
| Dresses | Blouses | |
|---|---|---|
| Allocated joint costs |
b. What is the sales value at the split-off point for
dresses?
c. Should any of the products be processed beyond the
split-off point? Show computations.
| Dresses | Jackets | Blouses | |
|---|---|---|---|
| Net benefit (cost) of further processing |
| Process Further? | |
|---|---|
| dresses |
| jackets | |
| blouses |
d. If 19,200 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale?
Solutions
Expert Solution
a.
Joint Cost Allocation
Dresses = $576000 / 960 x 464 = $278400
Blouses = $576000 / 960 x 128 = $76800
b.Sales Value at split off for Dresses = $960000 - 368000 - 128000 = $464000
c.
| Dresses | Jackets | Blouses | |
| Sales Value after processing | $ 480,000 | $ 428,800 | $ 336,000 |
| Sales Value at Split off | $ 464,000 | $ 368,000 | $ 128,000 |
| Incremental Sales Revenue | $ 16,000 | $ 60,800 | $ 208,000 |
| Additional Processing Costs | $ 41,600 | $ 32,000 | $ 124,800 |
| Net benefit (cost) of further processing | $ (25,600) | $ 28,800 | $ 83,200 |
Jackets and Blouses should be processed further
d.
| Sales Revenue | $ 321,600 | =428800/25600*19200 |
| Cost of Goods Sold | $ 189,600 | =(220800+32000)/25600*19200 |
| Gross Profit | $ 132,000 |
ekkarill92 answered 2 years agoRelated Solutions
Center Company currently produces three products from a joint process. The joint process has total costs...
Center Company currently produces three products from a joint
process. The joint process has total costs of $511,000 per month.
All three products, A, B & C, are immediately saleable as they
come out of the joint process. Alternatively, any of the products
could continue on with additional processing and be sold as a more
complete product. The following information is available: Units
Immediate Sales Price Later Sales Price Unit Cost of Further
Processing A 4,500 $ 18 $ 20...
Lido Products produces two products (A and B) from a joint process. The joint cost of...
Lido Products produces two products (A and B) from a joint
process. The joint cost of production is $80 000. Five thousand
units of Product A can be sold at split-off for $20 per unit or
processed further at an additional cost of $20 000 and sold for $25
per unit. Ten thousand units of Product B can be sold at split-off
for $15 per unit or processed further at an additional cost of $20
000 and sold for $16...
Lido Products produces two products (A and B) from a joint process. The joint cost of...
Lido Products produces two products (A and B) from a joint
process. The joint cost of production is $80 000. Five thousand
units of Product A can be sold at split-off for $20 per unit or
processed further at an additional cost of $20 000 and sold for $25
per unit. Ten thousand units of Product B can be sold at split-off
for $15 per unit or processed further at an additional cost of $20
000 and sold for $16...
2 – Portofino Corporation produces three products in a joint process: Product A, Product B and...
2 – Portofino Corporation produces three
products in a joint process: Product A, Product B and Product C.
The total joint manufacturing costs were 100,000$. Information
regarding the products appears below:
Product A
Product B
Product C
Units Produced
20,000
25,000
10,000
Sales Value at Split-off
$150,000
$50,000
$20,000
Additional costs if Processed further
$10,000
$30,000
$5,000
Sales Value if Processed Further
$170,000
$90,000
$28,000
Required:
(a) Allocate the joint costs using the relative sales value at
split-off method.
(b)...
ABC Company produces three products in a joint production process. At the split-off point, all three...
ABC Company produces three products in a joint production process.
At the split-off point, all three products are produced further and
then sold. Information about these products for 2019, the most
recent year, appears below: Product A Product B Product C Units
produced ............... 15,000 25,000 10,000 Selling price
................ $50 per unit $40 per unit $75 per unit Additional
processing costs .. $15 per unit $16 per unit $37.50 per unit Joint
costs for 2019 totaled $150,000. During 2019,...
Balley, Inc. produces three milk products (all are main products) from a joint process costing $200,000....
Balley, Inc. produces three milk products (all are main
products) from a joint process costing $200,000. Data from the
current period’s operation follow:
Units
Sales
Price
Separable Total Revenue
After
Produced at
Split-Off Costs
further Processing
Regular
5,000
$5
$10,000
$ 40,000
Fat-free 15,000
7
16,000
120,000
2%
30,000
8
5,000
250,000
Which product(s) should be processed...
Balley, Inc. produces three milk products (all are main products) from a joint process costing $200,000....
Balley, Inc. produces three milk products (all are main
products) from a joint process costing $200,000. Data from the
current period’s operation follow:
Units
Sales
Price
Separable Total Revenue
After
Produced at
Split-Off Costs
further Processing
Regular
5,000
$5
$10,000
$ 40,000
Fat-free 15,000
7
16,000
120,000
2%
30,000
8
5,000
250,000
If Lucerne produces and sells...
BioMorphs Corporation produces three products in a monthly joint production process. During the first stage of...
BioMorphs Corporation produces three products in a monthly joint
production process. During the first stage of the process liquids
and chemicals costing $60,000 are heated and three different
compounds emerge: 3,000 gallons of Molecue worth $22 per gallon are
created from the steam; 10,000 gallons of Borphue worth $15 are
drained from the tank; and 1,000 gallons of the tank residue,
labeled as Polygard, are sold as fertilizer for $5.50 per gallon.
Before Molecue is sold, it must be purified...
Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into...
Fletcher Fabrication, Inc., produces three products by a joint
production process. Raw materials are put into production in
Department X, and at the end of processing in this department,
three products appear. Product A is sold at the split-off point
with no further processing. Products B and C require further
processing before they are sold. Product B is processed in
Department Y, and product C is processed in Department Z. The
company uses the estimated net realizable value method of...
Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into...
Fletcher Fabrication, Inc., produces three products by a joint
production process. Raw materials are put into production in
Department X, and at the end of processing in this department,
three products appear. Product A is sold at the split-off point
with no further processing. Products B and C require further
processing before they are sold. Product B is processed in
Department Y, and product C is processed in Department Z. The
company uses the estimated net realizable value method of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What 2 things happen to the melting point of a solid when an impurity is present?
- How Can Hominin Evolution be characterized as " mosaic evolution" Use examples of species from the...
- Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of...
- Mobile and wireless devices are being increasingly used in the Business Administration and Management Industry. write...
- What are the options that might be considered in relation to introducing flexible work practices? What...
- Question 2 : Aggregate Scores: Write a program that opens 2 files, quiz.txt, and hw.txt. The...
- Define the term symbiosis specifically as it applies in a biological context. Compare and contrast parasitism,...
ADVERTISEMENT