Question
In: Accounting
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 per unit. What is the difference in profit if
Lido decides to process further Product A, instead of selling it at
split-off?
Select one:
a. $27 000 decrease
b. $21 000 increase
c. $25 000 increase
d. $5000 increase
Solutions
Expert Solution
Solution:
d. $5,000 Increase
| Particulars | Product A |
| Sales form further processing (5000 x 25) | 125000 |
| Less: sales revenue if sold (5000 x 20) | 100000 |
| Incremental revenue from further processing (125000 - 100000) | 25000 |
| Less: Cost of futher processing | 20,000 |
| Increase(decrease) in profit (25000 - 20000) | 5,000 |
ekkarill92 answered 2 years agoRelated Solutions
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...
TMCC Inc. produces joint products A, B, and C from a joint process. Information concerning a...
TMCC Inc. produces joint products A, B, and C from a joint
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cost of $120,000 was as follows:
A
B
C
Total
Units Sold
2,500
4,000
1,500
8,000
Price (after addt'l processing)
$
35
$
22
$
15
Separable Processing cost
$
35,000
$
12,000
$
16,000
$
63,000
Units Produced
2,500
4,000
1,500
8,000
Total Joint Cost
$
120,000
Sales Price at Split-off
$
25
$
12
$...
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Yards
Sales price
per yard at
split-off
Disposal
cost per yard at
split-off
Further
processing
per yard
Final sale
price per
yard
X 1,500 $6.00 $3.50 $1.00 $7.50
Z 2,200 9.00 5.00 3.00 11.25
If X and Z are processed further, no disposal costs will be
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Pounds
Sales price
per lb. at
split-off
Disposal
cost per
lb. at
split-off
Further
processing
per pound
Final
sales price
per pound
A
800
$6.50
$3.00
$2.00
$ 7.50
B
1,100
8.25
4.20
3.00
10.00
C
1,500
8.00
4.00
3.50
10.50
If the products are processed further, Baker Company will incur the
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The two joint products are processed beyond the split-off point,
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cost for the by-product. A summary of a recent month’s activity at
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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...
he Marshall Company has a joint production process that produces two joint products and a by-product....
he Marshall Company has a joint production process that produces
two joint products and a by-product. The joint products are Ying
and Yang, and the by-product is Bit. Marshall accounts for the
costs of its products using the net realizable value method. The
two joint products are processed beyond the split-off point,
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Company A produces two products—methanol (wood alcohol) and
turpentine -- in a joint process. Joint costs amount to $124,200
per batch of output. Each batch totals 13,500 gallons: 25% methanol
and 75% turpentine. Both products are processed further without
gain or loss in volume. Separable processing costs are methanol,
$11 per gallon; turpentine, $3 per gallon. Methanol sells for $22
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2 – Portofino Corporation produces three products in a joint process: Product A, Product B and...
2 – Portofino Corporation produces three
products in a joint process: Product A, Product B and Product C.
The total joint manufacturing costs were 100,000$. 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:
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split-off method.
(b)...
Pam Inc. produces joint products O, P, and Q from a joint process. Information concerning a...
Pam Inc. produces joint products O, P,
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After Split - Off
Product
Units
Produced
Additonal
Costs
Market
Values
O
1,400
$22,000
$70,000
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3,200
16,000
60,000
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6,400
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Required:
(1) Allocate the joint costs to the joint products using the
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