Chapter 11 PPT

Chapter 11 PPT - Cost Accounting Foundations and Evolutions...

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Chapter 11 Allocation of Joint Costs and Accounting for By-Products Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn
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Learning Objectives (1of 1) Classify joint process outputs Identify when output becomes a joint product Allocate joint costs to products Describe how to handle by-products and scrap
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Terms Joint process - single process in which one product cannot be manufactured without producing others Extractive industries Agriculture industries Food industries Chemical industries
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Terms A joint process produces (1) Joint products - primary outputs of a joint process; substantial revenue-generating ability (2) By-products – incidental output of a joint process with a higher sales value than scrap but less than joint products (3) Scrap –incidental output of a joint process with a low sales value (4) Waste - residual output with no sales value
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Terms Joint costs material, labor, and overhead incurred during a joint process Allocate to primary products of a joint process using Physical measures Monetary measures Interpret costs allocated to joint products carefully; product profitability is determined largely by the allocation method
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Problem Caster Company uses a joint process to produce two products-widgets and wonders. The joint cost was $400,000. The company produced 3,000 widgets and 5,000 wonders. Widgets sell for $50 per unit and wonders sell for $90 per unit. The cost to dispose of the widgets is $10 per unit and the cost to dispose of the wonders is $14 per unit.
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1. What is the joint cost allocated to widgets and wonders using the sales value at split-off method? 2.
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Chapter 11 PPT - Cost Accounting Foundations and Evolutions...

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