Chapter 7 BEX

BEX.07.10

i do not need to see work only answrs

Allocating Joint Costs Using the Net Neatzable Value Method A company manufactures three products, L-Ten, Trol, and Plaze, from a joint process. Each production run costs $12,900. None of the products can be said at split off, but must be processed further. Information on one batch of the three products is as follows: Further Processing Cost per Gallon Eventual Market Price per Gallon Product Gallons L-Ten 3.500 $0.50 $ 2.00 Tho 1.00 5.00 4,000 2,500 Plaza 1.50 5.00 Required: 1. Allocate the joint cast to L-Ten, Triol, and Pioze using the net realizable value method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar, Joint Coast Grades Allocation L-Ten 2,084 X Tho 6,351 Pioze 12,900 X $ 18,000 x Total 2. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation 4,465 x x L-len Thol Fige 4,465 X x Total $ 4,465 X Feedbags Check My Work 1. The net realizable value method is used when one or more of the joint products cannot be sold at split-on. In this case, a hypothetical market value is constructed so that joint cost allocation can be done as close to the split-off point as possible. An example of how to allocate using this method. 2. Show the effect of the change in cost. See Example 7.10. Allocating Joint Costs Using the Net Neatzable Value Method A company manufactures three products, L-Ten, Trol, and Plaze, from a joint process. Each production run costs $12,900. None of the products can be said at split off, but must be processed further. Information on one batch of the three products is as follows: Further Processing Cost per Gallon Eventual Market Price per Gallon Product Gallons L-Ten 3.500 $0.50 $ 2.00 Tho 1.00 5.00 4,000 2,500 Plaza 1.50 5.00 Required: 1. Allocate the joint cast to L-Ten, Triol, and Pioze using the net realizable value method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar, Joint Coast Grades Allocation L-Ten 2,084 X Tho 6,351 Pioze 12,900 X $ 18,000 x Total 2. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation 4,465 x x L-len Thol Fige 4,465 X x Total $ 4,465 X Feedbags Check My Work 1. The net realizable value method is used when one or more of the joint products cannot be sold at split-on. In this case, a hypothetical market value is constructed so that joint cost allocation can be done as close to the split-off point as possible. An example of how to allocate using this method. 2. Show the effect of the change in cost. See Example 7.10