Homestead Farming is a dairy farm. Each gallon of milk that the farm produces have a...
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Homestead Farming is a dairy farm. Each gallon of milk that the farm produces have a processing cost of $900 and can be converted into cream and skim milk. Separable production costs of cream are a total of $610 and $490 for the skim milk. During the period, the farm sold 800 gallons of cream and 500 gallons of skim milk. Ending inventory was 130 gallons of cream and 80 gallons of skim milk. The farm had no beginning inventories. Selling price per gallon is as follows: ● Cream - $4.00 ● Skim milk $1.50 Required 1. Allocate the joint costs of the cream and skim milk using the NRV method. 2. The cream can be further processed into butter. Additional processing costs would be $2,500. Further processing would result in a loss of 100 gallons of cream. Butter could be sold for $8.00 a gallon. Determine if the cream should be further processed into butter. Homestead Farming is a dairy farm. Each gallon of milk that the farm produces have a processing cost of $900 and can be converted into cream and skim milk. Separable production costs of cream are a total of $610 and $490 for the skim milk. During the period, the farm sold 800 gallons of cream and 500 gallons of skim milk. Ending inventory was 130 gallons of cream and 80 gallons of skim milk. The farm had no beginning inventories. Selling price per gallon is as follows: ● Cream - $4.00 ● Skim milk $1.50 Required 1. Allocate the joint costs of the cream and skim milk using the NRV method. 2. The cream can be further processed into butter. Additional processing costs would be $2,500. Further processing would result in a loss of 100 gallons of cream. Butter could be sold for $8.00 a gallon. Determine if the cream should be further processed into butter.
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To allocate the joint costs of the cream and skim milk using the NRV Net Realizable Value method we need to follow these steps Step 1 Calculate the NR... View the full answer
Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
Posted Date:
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