Exam 6: Joint and By-Product Costing

Figure 6-5 Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs £50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of £60 per unit and £40 per unit for Dulls. The market price is £250 for Brights and £200 for Dulls. -Refer to Figure 6-5. What is the amount of joint costs allocated to Brights using the net realizable value method?

Figure 6-10 Manning Company uses a joint process to produce products W, X, Y, and Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are £120,000. Other relevant data are as follows: -Refer to Figure 6-10. Which products should Manning process further?

Anderson Company pays a flat fee of £500 for the right to retrieve stray golf balls from lakes and ponds at golf and country clubs. The recovered balls are then cleaned, graded as to quality (birdie, bogey, or duffer), and sold to sporting goods stores at the following prices per dozen: birdie quality, £5; bogey quality, £4; and duffer quality, £3. Last month £8,000 of cost was incurred retrieving the following quantities of golf balls: birdie quality, 1000 dozen; bogey quality, 3,000 dozen; and duffer quality, 2,000 dozen. Required: (Calculate relative quantity to three decimal points.) a. Determine the cost and gross profit per cent for each type of golf ball using the physical units method of joint cost allocation. b. Repeat part (a) using the sales-value-at-split-off method of joint cost allocation. c. The company has an opportunity to sell bogey quality balls for £4.50 per dozen to a company that operates golf driving ranges; however, the balls will have to be painted and striped. The company estimates that the cost of painting and striping will be 60 cents per dozen. Assuming the physical unit method is used to allocate joint costs, should the offer be accepted?

Figure 6-3 Bond Ltd., which manufactures products W, X, Y, and Z through a joint process costing £18,000, has the following data for 2011: -Refer to Figure 6-3. What is the amount of joint costs assigned to Product X using the sales-value-at-split-off method?

Which of the following industries would most likely have joint costs in production?

The ____ is where products become distinguishable after passing through a common process.

Joint costs are

Joint products are

Ottawa Ltd. produces two products from a joint process. Information about the two joint products is as follows: The cost of the joint process is £85,000. -Refer to Figure 6-12. Ottawa currently sells both products at the split-off point. If Ottawa makes decisions that maximize profit, Ottawa's profit will increase by

Nelson SA. obtains two products and a by-product from its production process. By-product revenues are treated as other income and a noncost approach is used to assign costs to them. During the period, 1,200 units were processed at a cost of £12,000 for materials and conversion costs, resulting in the following: Required: a. Account for all costs using a physical basis for allocation. b. Account for all costs using net realizable value as the basis for allocation. c. Account for all costs using final sales value as the basis for allocation. d. How much joint costs should be allocated to the by-product?

Karl Body Parts produces three products in a joint process: Arms, Legs, and Heads. The joint costs are as follows: The hypothetical values for Arms, Legs, and Heads are £40,000, £50,000, and £30,000, respectively. If management processes the three products beyond the split-off point, sales values for Arms, Legs, and Heads would increase to £75,000, £65,000, and £60,000, respectively. In order to process the products further, the company must incur separable costs of £7,000, £16,000, and £5,000 for products Arms, Legs, and Heads, respectively. Karl uses the sales-value-at-split-off method to allocate joint costs. Should Karl Body Parts process Arms further?

Figure 6-4 Deli Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were £25,000. In addition, 4,000 units of X and 6,000 units of Y were produced. Separable processing costs beyond the split-off point were: X-£10,000; Y-£20,000. X sells for £10.00 per unit; Y sells for £7.50 per unit. -Refer to Figure 6-4. What amount of joint costs will be allocated to product X using the estimated net realizable value method?

The cost of crude oil used in producing gasoline products is an example of

Jazzmyne Company manufactures two products from a joint process. Information about the two joint products is as follows: The cost of the joint process is £1,750,000. Required: a. Which of Jazzmyne's joint products should be processed further? b. Assume that Jazzmyne currently sells both products at the split-off point. What is Jazzmyne's income? c. Assume that Jazzmyne makes decisions about its joint products that maximize profit. What is Jazzmyne's income?

Figure 6-11 Information about three joint products follows: The cost of the joint process is £140,000. -Refer to Figure 6-11. Assuming all of the sell now or process further decisions were correctly made, what will be the firm's income?

Figure 6-11 Information about three joint products follows: The cost of the joint process is £140,000. -Refer to Figure 6-11. Which of the joint products should be processed further?

Moore Manufacturing Company makes two products from a common input. Joint processing costs up to the split-off point total £23,400. The company allocates the joint costs to the products on the basis of their total sales values at split-off. The total sales value at split-off for both products is the same. Each product may be sold at the split-off point or processed further. Data concerning one of these products are as follows: What is the minimum amount the company would accept for this product if it is to be sold at the split-off point?

Which of the following costs is NOT relevant to a decision to sell a product at split-off or to process the product further and then sell the product?

____ are products with substantial value which are produced simultaneously by the same process up to a split-off point.

Lake Ltd. manufactures two products, AA and BB, from a joint process. A production run costs £20,000 and results in 500 units of AA and 2,000 units of BB. Both products must be processed past the split-off point, incurring separable costs of £5 per unit for AA and £10 per unit for BB. The market price is £25 for AA and £20 for BB. Required: a. Allocate joint production costs to each product using the physical units method. b. Allocate joint production costs to each product using the net realizable value method. c. Allocate joint production costs to each product using the constant gross margin percentage method.