GetAhead provides personal training services for, and sells apparel products to, its clients. GetAhead also generates a
Question:
GetAhead provides personal training services for, and sells apparel products to, its clients. GetAhead also generates a limited amount of revenue from the sale of protein drinks. The net realizable value from drink sales is accounted for as a reduction in the joint cost assigned to the Personal Training Services and Apparel Products. Protein drinks sell for $2.50 per bottle. The costs associated with making and packaging the drinks are $1.00 per bottle.
The following information is available for 2010 on apparel products, which are purchased by GetAhead:
Beginning inventory .........$ 35,000
Ending inventory ......... 21,500
Purchases ............ 181,350
Joint cost is to be allocated to Personal Training Services and Apparel Products based on approximated net realizable values. For 2010, total revenues were $753,000 from Personal Training Services and $289,000 from Apparel. The following joint costs were incurred:
Rent .........$36,000
Insurance ....... 43,750
Utilities ........ 3,000
Separate costs were as follows:
For the year, 2,500 bottles of protein drinks were sold.
a. What is the total net realizable value of protein drinks used to reduce the joint cost assigned to Personal Training and Apparel?
b. What is the joint cost to be allocated to Personal Training and Apparel?
c. What is the approximated pre-tax realizable value of each main product or service for 2010?
d. How much joint cost is allocated to each main product or service?
e. Determine the net income produced by each main product orservice.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn