Question : SHORT ANSWER. Write the word or phrase that best completes each : 1196110

 

SHORT ANSWER.

Write the word or phrase that best completes each statement or answers the question. 71)

Identify each item on the following list as a joint cost or a separable cost.

 

a.Cost of processing crude oil in a gasoline refinery.

b.Cost of processing timber (trees) at a sawmill.

c.Cost of processing lumber into different lengths and sizes at a sawmill.

d.Cost of raw tomato processing, tomatoes are to be used for different soups in a soup plant.

e.Cost of canning soup in a soup plant.

f.Cost of moulding plastic for use in making different toys on an assembly line.

g Cost of refining gasoline for use in automobiles.

h.Cost of processing water for human consumption.

i.Cost of processing pulp into paper.

j.Cost of processing pulp into cardboard. 71)

_____________

72)

In each of the following industries, identify possible joint (or severable) products at the splitoff point.

 

a.Coal

b.Petroleum

c.Dairy

d.Lamb

e.Lumber

f.Cocoa Beans

g.Christmas Trees

h.Salt

i.Cowhide 72)

_____________

73)

For each of the following items tell whether it is a main product, joint product, byproduct, or scrap. Assume traditional situations.

 

a.Bones from a butcher shop

b.Sawdust from a sawmill

c.Sawdust from a furniture manufacturer

d.Fuel oil from petroleum processing

e.Salt from a salt works process

f. Broth from cooking food

g.Raw milk for dairy processing

h.Skim milk from dairy processing 73)

_____________

74)

List three reasons why we allocate joint costs to individual products or services. Give an example of when

the particular cost allocation reason would come into use.

74)

_____________

75)

Sweet Sugar Company processes sugar beets into three products. During April the joint costs of processing were $240,000. Production and sales value information for the month were as follows:

Sales Value at

UnitsSplit off Separable

Product            Produced    Point        Costs

 

 

 

 

Sugar12,00080,00024,000

Sugar syrup8,00070,00064,000

Fructose syrup4,00050,00032,000

 

Required:

 

Determine the amount of joint cost allocated to each product if the sales value at split off method is used. 75)

_____________

76)

The Regina Foundry Corporation makes miniature Mountie statues from cast iron. Sales total 40,000 units

a year. The statutes are finished either rough or polished, with an average demand of 60% rough and

40% polished. Iron ingots, the direct material, costs $6 per pound. Processing costs are $200 to

convert 20 pounds into 40 statutes. Rough statutes are sold for $15 each, and polished statutes can be sold

for $18 or engraved for an additional cost of $5. Polished statues can then be sold for $30.

 

Required:

Determine whether The Regina Foundry Corporation should sell the engraved statutes. Why?

76)

_____________

77)

BC Lumber processes timber into four products. During January the joint costs of processing were $280,000. There was no beginning inventory at the beginning of the month. Production and sales value information for the month were as follows:

 

Sales Value at

 

Product     Boardmetres    Split off Point          Ending Inventory

2 x 4’s6,000,000$0.30 per boardmetre500,000 bdmetre

2 x 6’s3,000,0000.40 per boardmetre250,000 bdmetre

4 x 4’s2,000,0000.45 per boardmetre100,000 bdmetre

slabs1,000,0000.10 per boardmetre

50,000 bdmetre

 

Required:

 

Determine the value of ending inventory if the sales value at split off method is used for product costing. Round to 3 decimal places when necessary. 77)

_____________

78)

CSI Chemical, Inc. processes pine rosin into three products; turpentine, paint thinner, and spot remover. During May the joint costs of processing were $240,000. Production and sales value information for the month were as follows:

 

Product         Units Produced      Sales Value at Split off Point

Turpentine3,000 litres$30,000

Paint thinner3,000 litres25,000

Wood alcohol1,500 litres12,500

 

Required:

 

Determine the amount of joint cost allocated to each product if the physical measure 78)

_____________

79)

Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer the joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer were as follows:

 

Sales Value at

Product    Cases    Split off Point   Separable Costs   Selling Price

Catsup100,000$6 per case $3.00 per case $28 per case

Juice150,0008 per case5.00 per case25 per case

Canned200,0005 per case2.50 per case10 per case

 

Required:

 

Determine the amount allocated to each product if the estimated net realizable value method is used and compute the cost per case for each product. 79)

_____________

80)

AllCanada Wire Products processes copper into wire. It makes 12 gauge and 14 gauge wire. During April the joint costs of processing the aluminium were $365,000. There were no beginning or ending inventories for the month. Production and sales value information for the month were as follows:

 

Product      Feet        Separable Costs      Selling Price

14 gauge200,000$0.20 per metre $0.90 per metre

16 gauge600,0000.30 per metre1.00 per metre

 

Required:

 

Determine the amount of joint costs allocated to each product if the constant gross-margin percentage method is used. 80)

_____________

71)

a. joint costf.

joint cost

b. joint costg. separable cost

c. separable costh. separable cost

d. joint costi. separable cost

e. separablej. separable cost 72)

a.Coke, Gas, Benzole, Tar, Ammonia

b.Crude Oil, Gas, Raw LPG

c.Milk, Butter, Cheese, Ice Cream, Skim Milk

d.Lamb Cuts, Tripe, Hides, Bones, Fat

e.Board, Newsprint, Shavings, Chips, etc.

f.Cocoa Butter, Cocoa Powder, Cocoa Shells

g.Christmas Trees, Wreaths, Decorations

h.Hydrogen, Chlorine, Caustic Soda

i.Leather, Suede, Chew Toys

73)

a.scrap

b.byproduct

c.scrap

d.joint product

e.main product

f.byproduct

g.joint product

h.joint product 74)

a.For inventory costing, and cost of goods sold computations for financial accounting purposes.

Example: Cost of goods sold and ending inventory valuation is necessary for reports to shareholders and for the inland revenue service.

 

b.For internal costing and cost of goods sold computations for internal reporting purposes.

Example: These computations are necessary for division profitability analysis.

 

c.Reimbursement under contracts.

Example: A firm produces multiple products or services—and uses the same resources and facilities to produce the products or services. But not all the firm’s products are under the contract. The firm must allocate the cost of these shared facilities or resources to reflect the portion used by the product under the contract.

 

d.Insurance settlement computations.

Example: Where a business with multiple products or services claim losses under an insurance policy and wants to calculate the loss. The insurance company and the insured must agree on the value of the loss.

 

e.Rate regulation. When companies are subject to rate regulation, the allocation of joint costs can be a significant factor in determining the regulated rates.

Example: Crude oil and natural gas are produced out of a common well.

 

 

75)

Product        Units    Sales Value  Percent

Joint cost allocated

Sugar12,000$ 80,00040% x $240,000$ 96,000

Sugar syrup8,00070,00035 x 240,0004,000

Fructose syrup4,00050,00025 x 240,00060,000

Total$200,000100%$240,000 76)

The Regina Foundry Corporation

should engrave the statutes because they increase profits by $7

per statute.

 

RoughPolished

 

Sales$15.00$18.00

Cost of Sales:

 

 

Materials ($6 x 20)/40

 

 

Conversion $200/40

$3.00

5.00

 

8.00

$3.00

5.00

 

8.00

Operating Income (loss)$7.00$10.00

 

Sales, polished and engraved$30.00

Costs:

 

 

Materials

 

 

Conversion

 

 

Additional Processing

$3.00

5.00

5.00

 

 

13.00

Advantage of processing further$17.00

 

77)

Product   Boardmetres    Sales value     % Joint Cost Allocated

 

 

 

 

 

 

2 x 4’s6,000,000$1,800,00045.0% x 280,000=$126,000

2 x 6’s 3,000,0001,200,00030.0% x 280,000=84,000

4 x 4’s 2,000,000900,00022.5% x 280,000=63,000

slabs1,000,000100,0002.5%

x 280,000=7,000

Totals$4,000,000100.0%

 

 

 

$280,000

 

ProductFraction of prod. in inventory Allocated Inventory value

2 x 4’s500,000/6,000,000 x $126,000 =$10,500

2 x 6’s250,000/3,000,000 x 84,000 =7,000

4 x 4’s100,000/2,000,000 x 63,000 =3,150

slabs50,000/1,000,000 x 7,000 =

 

 

350

Total$21,000

78)

 

Product        Units produced    Percentage      Joint costs Allocated

Turpentine3,000 litres40% x $240,000 = $ 96,000

Paint thinner 3,000 litres40 x 240,000 =

96,000

Spot remover 1,500 litres20 x 240,000 =

48,000

Totals7,500 litres100%$240,000 79)

Product    Expected value    Separable     Net value    Percentage

Catsup$2,800,000$ 300,000 $2,500,000 35.71%

Juice3,750,000750,000

3,000,000 42.86

Canned2,000,000500,000

1,500,000 21.43

Totals$7,000,000100.00%

 

Product      Joint costs Allocated  Separable    Product costs

Catsup$420,000 = $149,982 + $300,000 = $449,982

Juice420,000

= 180,012 + 750,000 =

930,012

Canned420,000

= 90,006 + 500,000 =

590,006

 

Catsup cost per case = $449,982/100,000 = $4.50

Juice cost per case = $930,012/150,000 = $6.20

Canned cost per case = $590,006/200,000 = $2.95 80)

Expected sales:

14 gauge 200,000 x $0.90$180,000

16 gauge 600,000 x $1.00600,000

Total sales 780,000

Costs:

Joint$365,000

14 gauge (200,000 x $0.20) 40,000

16 gauge (600,000 x $0.30)

180,000

585,000

Gross margin$195,000

 

Gross-margin percentage $195,000/$780,000 = 0.25

 

14 gauge                16 gauge

Totals

Sales$180,000$600,000$780,000

Less gross margin (0.25)

 

45,000                   150,000

195,000

Cost of goods sold$135,000$450,000$585,000

Separable costs

40,000

180,000

220,000

Joint costs allocated$ 95,000$270,000$365,000 81)

Paper                Cardboard   Totals

 

 

Sales$330,000$336,000$666,000

Produced but not sold

 

 

27,500

 

42,000

 

69,500

Total sales value$357,500$378,000$735,500

Separable costs

224,000

264,000

488,000

Contribution margin$133,500$114,000$247,500

Joint costs144,000

Gross margin$103,500 82)

Because of demand, make 24 per batch of rough (0.60 x 40). Because of higher profit margin, all polished statues should be engraved. The product mix should be 100 percent polished with engraving.

 

Rough Polished

Sales$15.00 $18.00

Cost of sales:

Materials ($6 x 20)/40$3.00

$ 3.00

Conversion $200/40

5.00

8.00

Operating income (loss)$ 7.00

$10.00

Sales polished and engraved$30.00

Costs:

Materials$3.00

Conversion5.00

Additional processing5.00

 

13.00

 

Incremental income of processing further

 

 

$17.00 83)