10026_040510_96 - $5.89 Cream Middle Sludge Sales (500)(35)...

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- Class example using white handout Chapter 16 -If you know the value at split off point, use it. - If not, you must work backward. A.) Cream 300($24)= 7200/12000= .60(10,000)= 6000 Middle 600($15) = 9000-4800= 4200/12000= .35(10,000)= 3500 Sludge 100($7)= 700-1(100)= 600/12000= .05(10,000)= 500 Joint + Separate Costs: Cream 6000+8000= 14,000 Middle 3500+4800= 8300 Sludge 500+100= 600 Cream 14,000/500 = $28 Middle 8300/600 = $13.83 Sludge 600/100 = $6.00 Cream Middle Sludge Sales 35 15 7 COGS (28) (13.83) (6) G.P. $7 $1.17 $1.00 Constant Gross Margin Percentage Method: Sales 500(35) + 600(15) + 100(7) = $27,200 COGS 10,000 + 8000 + 4800 + 100 = $22,900 G.P. $4,300 Gross Profit % : 4300/27,200 = 15.8% COGS % : 22,900/27,200 = 84.2% 1-15.8 = 84.2 Cream Middle Sludge 35 15 7 x .842 x .842 x .842 $29.47 $12.63
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Unformatted text preview: $5.89 Cream Middle Sludge Sales (500)(35) 17,500 *Calculate on our own. COGS (.842) (14,735) G.P. (.158) 2765 Total 14,735 Separate (8000) Joint 6735 2778 489 *Bi-products are insignificant. B.) Value Method: Sales (100)(7) 700 COGS (100)(1) 100 Value 600 Joint 10,000 – 600 = $9400 Joint Separate Cost Cream 300 3/9 = 1/3(9400) = 3133 + = $22.666 Middle 600 6/9 = 2/3(9400) = 6267 + = $19.11 Another Way: Sales (80)(7) = 560 COGS (80)(1) = (80) Value 480 Joint Separate Cost Cream 300 1/3(10,000) = 3333 + = $22.666 Middle 600 2/3(10,000) = 6667 + = $19.11 C.) At Split-Off: 300 gallons cream Process Further: (500)(35) = $17,500 x 24 Separate Cost: (8000) 7200 $9500 *Yes, process further....
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This note was uploaded on 08/25/2010 for the course ACCT 327 taught by Professor Gillespie,j during the Spring '08 term at University of Delaware.

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10026_040510_96 - $5.89 Cream Middle Sludge Sales (500)(35)...

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