Higgins Corporation manufactures two chemicals (Flextra and Hydro) in a joint process. Data from a recent...
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Higgins Corporation manufactures two chemicals (Flextra and Hydro) in a joint process. Data from a recent month follow. Direct materials used: $360,000 Direct labor: $150,000 Manufacturing overhead: $690,000 Manufacturing output: Flextra: 40,000 gallons Hydro: 120,000 gallons Flextra sells for $15 per gallon and Hydro sells for $20 per gallon. Required: Compute the total joint costs to be allocated to Flextra and Hydro. Compute the joint costs that would be allocated to Flextra by using the physical-units method. Compute the joint costs that would be allocated to Hydro by using the relative-sales-value method. Assume that Hydro can be converted into a more refined product, Hydro-R, in a totally separable process at an additional cost of $4 per gallon. Hydro-R can be sold in the marketplace for $26 per gallon. a. Compute the net realizable value of Hydro-R. b. If Higgins allocated $800,000 of joint cost to Hydro-R and sold 90% of the production completed, determine the cost of remaining Hydro-R that would be transferred to the company's month-end balance sheet as finished-goods inventory. Higgins Corporation manufactures two chemicals (Flextra and Hydro) in a joint process. Data from a recent month follow. Direct materials used: $360,000 Direct labor: $150,000 Manufacturing overhead: $690,000 Manufacturing output: Flextra: 40,000 gallons Hydro: 120,000 gallons Flextra sells for $15 per gallon and Hydro sells for $20 per gallon. Required: Compute the total joint costs to be allocated to Flextra and Hydro. Compute the joint costs that would be allocated to Flextra by using the physical-units method. Compute the joint costs that would be allocated to Hydro by using the relative-sales-value method. Assume that Hydro can be converted into a more refined product, Hydro-R, in a totally separable process at an additional cost of $4 per gallon. Hydro-R can be sold in the marketplace for $26 per gallon. a. Compute the net realizable value of Hydro-R. b. If Higgins allocated $800,000 of joint cost to Hydro-R and sold 90% of the production completed, determine the cost of remaining Hydro-R that would be transferred to the company's month-end balance sheet as finished-goods inventory.
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Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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