Physical Units Method, Relative Sales-Value-at-Split-off Method, Net Realizable Value Method, Decision Making

Sonimad Sawmill, Inc. (SSI), purchases logs from independent timber contractors and processes them into the following three types of lumber products:

Studs for residential construction (e.g., walls and ceilings)

Decorative pieces (e.g., fireplace mantels and beams for cathedral ceilings)

Posts used as support braces (e.g., mine support braces and braces for exterior fences around ranch properties)

These products are the result of a joint sawmill process that involves removing bark from the logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting the individual products from the logs, depending upon the type of wood (pine, oak, walnut, or maple) and the size (diameter) of the log.

The joint process results in the following costs and output of products during a typical month:

Product yield and average sales value on a per-unit basis from the joint process are as follows:

The studs are sold as rough-cut lumber after emerging from the sawmill operation without further processing by SSI. Also, the posts require no further processing. The decorative pieces must be planed and further sized after emerging from the SSI sawmill. This additional processing costs SSI $80,000 per month and normally results in a loss of 10 percent of the units entering the process. Without this planing and sizing process, there is still an active intermediate market for the unfinished decorative pieces where the sales price averages $60 per unit.

Required:

1. Based on the information given for Sonimad Sawmill, Inc., allocate the joint processing costs of $1,000,000 to each of the three product lines using the:

a. Relative sales-value-at-split-off method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.

(Note: Difference due to rounding.)

b. Physical units method at split-off.

c. Estimated net realizable value method. When required, round decimal values to four places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as "88.35" percent.

(Note: Difference due to rounding.)

Feedback

1. a. The sales-value-at split-off method allocates joint cost based on each product’s proportionate share of market or sales value at the split-off point. b. The physical units method allocates the cost in proportion to the number of units and is useful when the value of one product is close to the value of another product. c. The net realizable value method is used when one or more of the joint products cannot be sold at split-off. In this case, a hypothetical market value is constructed so that joint cost allocation can be done as close to the split-off point as possible.

2. Prepare an analysis for Sonimad Sawmill, Inc., to compare processing the decorative pieces further as it presently does, with selling the rough-cut product immediately at split-off.

Feedback

1. Analyze the firm and give calculations. Review methods.

Feedback

Partially correct

Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up). The data is in the following table, and there are some negative values because sometimes the supplier is able to layout the pattern better than the computer ("Waste run up," 2013).

Table #11.3.3: Run-ups for Different Plants Making Levi Strauss Clothing

Do the data show that there is a difference between some of the suppliers? Test at the 1% level

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Let x₁ = percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up) from plant 1

Let x₂ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let x₃ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let x₄ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let x₅ = percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

Let ?₁ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 1

Let ?₂ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let ?₃ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let ?₄ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let ?₅ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

(i) Which of the following statements correctly defines the null hypothesis H_O?

A. All five mean percentage differences are equal

B. Two of the mean percentage differences are not equal

C. At least four of the mean percentage differences are equal

D. At least two of the mean percentage differences are not equal

Enter letter corresponding to correct answer

Let ?₁ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 1

Let ?₂ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 2

Let ?₃ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 3

Let ?₄ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 4

Let ?₅ = mean percentage difference of waste between the layout on the computer and the actual waste of run-up from plant 5

(ii) Which of the following statements correctly defines the alternate hypothesis H_A?

A. All five mean percentage differences are equal

B. Two of the mean percentage differences are not equal

C. At least four of the mean percentage differences are equal

D. At least two of the mean percentage differences are not equal

Enter letter corresponding to correct answer

(iii) Enter the level of significance ? used for this test:

Enter in decimal form. Examples of correctly entered answers: 0.01    0.02    0.05    0.10

(iii) Calculate sample mean and sample standard deviation for Plant 1 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:

13.27,2.31

0.27,0.06

-10.30,0.79

(v) Calculate sample mean and sample standard deviation for Plant 2 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:

13.27,2.31

0.27,0.06

-10.30,0.79

(vi) Calculate sample mean and sample standard deviation for Plant 3 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:

13.27,2.31

0.27,0.06

-10.30,0.79

(vii) Calculate sample mean and sample standard deviation for Plant 4 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:

13.27,2.31

0.27,0.06

-10.30,0.79

(viii) Calculate sample mean and sample standard deviation for Plant 5 sample

Enter sample mean in decimal form to nearest hundredth, then comma, then sample standard deviation in decimal form to nearest hundredth. Examples of correctly entered answers:

13.27,2.31

0.27,0.06

-10.30,0.79

(ix) Using technology, determine F ratio test statistic and corresponding p-value.

Use "CTRL-click" to access link. Enter test statistic to nearest hundredth, then enter comma, then enter p-value to nearest thousandth. Examples of correctly entered responses:

12.33,0.004   

7.50,0.000

6.77,0.504

(x) Comparing p-value and ? value, which is the correct decision to make for this hypothesis test?

A. Reject H_o

B. Fail to reject H_o

C. Accept H_o

D. Accept H_A

Enter letter corresponding to correct answer.

(xi) Select the statement that most correctly interprets the result of this test:

A. The result is not statistically significant at .01 level of significance. Sufficient evidence exists to support the claim that there is a difference between some of the suppliers.

B. The result is statistically significant at .01 level of significance. There is not enough evidence to support the claim that there is a difference between some of the suppliers.

C. The result is statistically significant at .01 level of significance. Sufficient evidence exists to support the claim that there is a difference between some of the suppliers.

D. The result is not statistically significant at .01 level of significance. There is not enough evidence to support the claim that there is a difference between some of the suppliers.

Cornerstone Exercise 6.10 (Algorithmic)
Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $4.33 ($65,000/15,000), and the December unit materials cost is $13.49 ($580,000/43,000). The equivalent units in BWIP are 15,000, and the FIFO equivalent units are 43,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$  per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.47 ($66,000/19,000), and the December unit materials cost is $12.95 ($570,000/44,000). The equivalent units in BWIP are 19,000, and the FIFO equivalent units are 44,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$  per unit

Cornerstone Exercise 6.10 (Algorithmic) Cost Information and the Weighted Average Method Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below. Direct Materials Conversion Costs Units completed 41,000 41,000 Add: Units in ending work in process × Percentage complete: 14,000 × 100% direct materials 14,000 — 14,000 × 45% conversion materials — 6,300 Eqivalent units of output 55,000 47,300 Costs: Work in process, December 1: Direct materials $68,000 Conversion costs 14,000 Total work in process $82,000 Current costs: Direct materials $550,000 Conversion costs 180,000 Total current costs $730,000 Required: 1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per equivalent unit 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. Cost of goods transferred out: Units completed $ Cost of EWIP Total costs assigned (accounted for) $ Reconciliation Cost to account for: BWIP $ Current (December) Total $ 3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $4.86 ($68,000/14,000), and the December unit materials cost is $13.41 ($550,000/41,000). The equivalent units in BWIP are 14,000, and the FIFO equivalent units are 41,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per unit

eBook Cornerstone Exercise 6.10 (Algorithmic) Cost Information and the Weighted Average Method Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below. Direct Materials Conversion Costs Units completed 46,000 46,000 Add: Units in ending work in process × Percentage complete: 20,000 × 100% direct materials 20,000 — 20,000 × 45% conversion materials — 9,000 Eqivalent units of output 66,000 55,000 Costs: Work in process, December 1: Direct materials $62,000 Conversion costs 10,000 Total work in process $72,000 Current costs: Direct materials $540,000 Conversion costs 180,000 Total current costs $720,000 Required: 1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per equivalent unit 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. Cost of goods transferred out: Units completed $ Cost of EWIP Total costs assigned (accounted for) $ Reconciliation Cost to account for: BWIP $ Current (December) Total $ 3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.10 ($62,000/20,000), and the December unit materials cost is $11.74 ($540,000/46,000). The equivalent units in BWIP are 20,000, and the FIFO equivalent units are 46,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per unit

Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Reconciliation
Cost to account for:

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.53 ($60,000/17,000), and the December unit materials cost is $10.42 ($500,000/48,000). The equivalent units in BWIP are 17,000, and the FIFO equivalent units are 48,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

What are the possible fates of glucose that is produced by photosynthesis?

Your research team identifies a bird species that has defective amylase. What would be the result of this defect?

Which of the following statements regarding feedback inhibition is true?

You clone a genetically-modified plant that has increased expression of amylase in the roots of a raspberry plant. What would you expect to occur?

A plant is grown in soil depleted in magnesium and potassium, but rich in phosphorous and available ground water. Which if the following would occur?   

Plants and fungi have a symbiotic (mutually beneficial) relationship in that fungi provide __________ to plants, and plants provide ___________ to fungi.

You are growing Brassica rapa plants in the lab. A mutation is introduced into a subset of plants that impairs mitochondrial function in cells. Which of the following pathways of cellular respiration would be affected?

Which of the following statements regarding noncyclic electron flow (the Z-scheme model) and cyclic electron flow are correct?

What happens at the end of binding mediation in a construction dispute when there are one or more disputed items that remain unresolved?

Select one:

a. Either party may escalate the unresolved items to litigation.

b. Either party can request a new mediator.

c. The mediator renders a final and binding decision on those items.

d. The mediator must help the parties renegotiate the contract.

Sami and his wife Salma live in a rented apartment for the past five years. Recently, they started constructing their house in an area where the property value decreased steadily over the years. The family wants to protect them financially in the event of a loss or damage to their house during the time of construction. What do you think on the insurance cover that would provide the desired protection?