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Chap07 template

# Chap07 template - Required How much of the joint cost...

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Solution (10 min) Required How much of the joint cost should be allocated to each joint product using the net realizable value method.
Exercise 7-27 Joint Products Outputs (gallons): Product A = 500 Product B = 1,000 Joint Costs = \$4,560 Sales value at Split-off Point: Product A = \$10.00 Product B = \$14.00 Separable costs per unit: Product B = \$2.50 Solution (20 min) Nebraska Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 500 gallons of product A and 1,000 gallons of product B to the split-off point costs \$4,560. The sales value at split-off is \$10 per gallon for product A and \$14 for product B. Product B requires additional processing beyond the split-off point, at a cost of \$2.50 per gallon, before it can be sold. Required What is Nebraska’s cost to product 1,000 gallons of product B?

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Solution (25 min) Required 1. What is the value of the ending inventory of product A? 2. What is the value of the ending inventory of product B?
Solution (25 min) 2. Determine the total cost allocated to advertising and sales using the step method. 3. Determine the total cost allocated to advertising and sales using the reciprocal method.

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Solution (30 min) Required 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method.
Solution (30 min) Required 1. What are the costs allocated to the two production departments from the two service departments using: a. The direct method b. The step method (design department goes first), and c. The reciprocal method? 2. The company is considering outsourcing programming services to DDB Services, Inc., for \$25.00 per hour. Should Tanner do this?

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Solution (30 min) Required 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method with the sourcing department going first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation?
Solution (20 min) Required 1. As a first step in moving to the outsourcing approach, McKeoun is considering an allocation based on the price of the outside maintenance supplier for each department. Calculate the cost allocation on this basis and compare it to the current labor-hour basis. 2. If McKeoun follows the proposed plan, what is likely to happen to the overall use of maintenance? How will each department managers be motivated to increase or decrease the use of maintenance? What will be the overall effects of going to the new plan?

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Solution (30 min) Required Determine the total cost in the financial analysis and market research groups, after departmental allocation using each of the following methods: direct method, step method, and reciprocal method.
Solution (25 min) Required What is the amount of maintenance and utility department costs distributed to producing departments A and B for June using (1) the direct method, (2) the step method, and (3) the reciprocal allocation method?

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Chap07 template - Required How much of the joint cost...

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