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# Indiana Soy Products (OSP) buys soybeans and processes them into other soy products. Each ton of soybeans that OSP purchases for $250 can be

## Indiana Soy Products (OSP) buys soybeans and processes them into other soy products. Each ton of soybeans that OSP purchases for $250 can be converted for an additional $180 into 675 lbs of soy meal and 180 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.36 and soy oil can be sold in bulk for $4.5 per gallon. OSP can process the 675 pounds of soy meal into 775 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2.36 per pound. The 180 gallons of soy oil can be packaged at a cost of $240 and made into 720 quarts of Soyola. Each quart of Soyola can be sold for $1.15. Read the requirements. Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Cookies/ Soy Meal Soyola/ Soy Oil Total Sales value of total production at splitoff Weighting Joint costs allocated Enter any number in the edit fields and then click Check Answer. i Requirements 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method 2. Should OSP have processed each of the products further? What effect does the allocation method have on this decision? The Cocoa Mass Edibles Factory manufactures and distributes chocolate products. i (Click the icon to view more information about Cocoa Mass.) Production and sales data for August 2017 are as follows (assume no beginning inventory): (Click the icon to view the data.) Read the requirements. Requirement 1. Calculate how the joint costs of $66,000 would be allocated between chocolate powder and milk chocolate under the different methods. a. Sales value at splitoff method. Begin by entering the appropriate amounts to allocate the joint costs. (Round the weig Joint costs i More Info Chocolate powder Milk chocolate Total Sales value of total pr More Info Enter any number in the parts 14 remaining It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately identifiable at a single splitoff point. Every 2,100 pounds of cocoa beans yields 40 gallons of chocolate-powder liquor base and 60 gallons of milk-chocolate liquor base. The chocolate-powder liquor base is further processed into chocolate powder. Every 40 gallons of chocolate-powder liquor base yield 660 pounds of chocolate powder. The milk-chocolate liquor base is further processed into milk chocolate. Every 60 gallons of milk-chocolate liquor base yield 1,080 pounds of milk chocolate. Cocoa beans processed, 31,500 pounds Costs of processing cocoa beans to splitoff point (including purchase of beans), $66,000 Separable Selling Price Processing Costs Production Sales Chocolate powder 9,900 pounds 16,200 pounds 6,600 pounds $10 per pound $ 14,000 pounds $11 per pound $ Milk chocolate 57,090 77,110 Cocoa Mass Edibles Factory fully processes both of its intermediate products into chocolate powder or milk chocolate. There is an active market for these intermediate products. In August 2017, Cocoa Mass Edibles Factory could have sold the chocolate-powder liquor base for $42 a gallon and the milk-chocolate liquor base for $52 a gallon.

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