costaccountingCh16

costaccountingCh16 - CHAPTER 16 COST ALLOCATION: JOINT...

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Unformatted text preview: CHAPTER 16 COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS 16-18 (10 min.) Net realizable value method. A diagram of the situation is in Solution Exhibit 16-18 (all numbers are in thousands). Cooking Oil Soap Oil Total Final sales value of total production, CO, 1,000 $50; SO, 500 $25 $50,000 $12,500 $62,500 Deduct separable costs to complete and sell 30,000 7,500 37,500 Net realizable value at splitoff point $20,000 $ 5,000 $25,000 Weighting $25,000 $20,000 = 0.8 $25,000 $5,000 = 0.2 Joint costs allocated, CO, 0.8 $24,000; SO, 0.2 $24,000 $19,200 $ 4,800 $24,000 SOLUTION EXHIBIT 16-18 (all numbers are in thousands) Soap Oil: 500units at $25per unit Cooking Oil: 1,000units at $50per unit Processing $24 , 000 Processing $30,000 Processing $7,500 Splitoff Point Joint Costs Separable Costs 16-1 Cost Allocation: Joint Products and Byproducts Illawara, Inc. Original Data Joint Costs ($1,000's) $24,000 Cooking Oil Soap Oil Separable Costs ($1,000's) $30,000 $7,500 Selling Price (per drum) 50 25 Sales Volume (1,000's of drums) 1,000 500 Joint Cost Allocation (all numbers in thousands) Cooking Oil Soap Oil Total 1. Final sales value of production $50,000 $12,500 $62,500 (Cooking oil, 1,000,000 drums x $50; Soap oil, 500,000 drums x $25) 2. Deduct separable costs to complete and sell 30,000 7,500 37,500 3. Net realizable value at splitoff point $20,000 $5,000 25,000 4. Weighting (Cooking oil, $20,000/$25,000; Soap oil, $5,000/$25,000) 0.8 0.2 5. Joint costs allocated $19,200 $4,800 $24,000 (Cooking oil, 0.8 x $24,000; Soap oil, 0.2 x $24,000) 16-2 16-19 (40 min.) Alternative joint-cost-allocation methods, further- process decision. A diagram of the situation is in Solution Exhibit 16-19. 1. Methanol Turpentine Total Physical measure of total production (gallons) 2,500 7,500 10,000 Weighting 10,000 $2,500 = 0.25 10,000 $7,500 = 0.75 Joint costs allocated, M, 0.25 $120,000; T, 0.75 $120,000 $ 30,000 $ 90,000 $120,000 2. Methanol Turpentine Total Final sales value of total production, M, 2,500 $21.00; T, 7,500 $14.00 $ 52,500 $105,000 $157,500 Deduct separable costs to complete and sell, M, 2,500 $3.00; T, 7,500 $2.00 7,500 15,000 22,500 Net realizable value at splitoff point $ 45,000 $ 90,000 $135,000 Weighting $135,000 $45,000 = 3 1 $135,000 $90,000 = 3 2 Joint costs allocated, M, 1/3 $120,000; T, 2/3 $120,000 $ 40,000 $ 80,000 $120,000 3. a. Physical-measure (gallons) method: Methanol Turpentine...
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costaccountingCh16 - CHAPTER 16 COST ALLOCATION: JOINT...

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