Soy Products

$($Upper NN$$SP$)$

buys soybeans and processes them into other soy products. Each ton of soybeans that

Upper NNSP

purchases for

$ $260$$$260$

can be converted for an additional

$ $210$$$210$

into

$700700$

lbs of soy meal and

$140140$

gallons of soy oil. A pound of soy meal can be sold at splitoff for

$ $1\mathrm{.}12$$$1\mathrm{.}12$

and soy oil can be sold in bulk for

$ $4\mathrm{.}5$$$4\mathrm{.}5$

per gallon.

Upper NNSP

can process the

$700700$

pounds of soy meal into

$750750$

pounds of soy cookies at an additional cost of

$ $340$$$340.$

Each pound of soy cookies can be sold for

$ $2\mathrm{.}12$$$2\mathrm{.}12$

per pound. The

$140140$

gallons of soy oil can be packaged at a cost of

$ $200$$$200$

and made into

$560560$

quarts of Soyola. Each quart of Soyola can be sold for

$ $1\mathrm{.}25$$$1\mathrm{.}25.$

Read the

requirements

LOADING...

$.$

Question content area bottom

Part $1$

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$/$

Soyola$/$

$$

$$

Soy Meal

Soy Oil

Total

Sales value of total production at splitoff

$$

$$

$$

Weighting

$$

$$

$$

Joint costs allocated

$$

$$

$$

Part $2$

b$.$ Now allocate the joint cost to the cookies and the Soyola using the NRV method. $($Round the weights to three decimal places and joint costs to the nearest$$ dollar.$)$

$$

Cookies

Soyola

Total

Final sales value of total production

$$

$$

$$

Deduct separable costs

$$

$$

$$

Net realizable value

$$

$$

$$

Weighting

$$

$$

$$

Joint costs allocated

$$

$$

$$

Part $3$

Requirement $2.$ Should

Upper NNSP

have processed each of the products$$ further? What effect does the allocation method have on this$$ decision?

Begin by calculating the profit or loss that would occur if

Upper NNSP

processed the products further. $($Use parentheses or a minus sign for$$ losses.$)$

$$

Cookies$/$

Soyola$/$

$$

Soy Meal

Soy Oil

Sell at splitoff : Revenue

$$

$$

Process further : NRV

$$

$$

Profit $($Loss$)$ from processing further

$$

$$

Part $4$

Upper NNSP

should

$$

$$

process further

sell as is

the soy meal because it

$$

$$

decreases

increases

profit. They should

$$

$$

process further

sell as is

the soy oil because profit will

$$

$$

be higher if they do

be lower if they do

$.$

Part $5$

Since the total joint cost is

$$

$$

different

the same

under both allocation$$ methods, it

$$

$$

is

is not

a relevant cost to the decision to sell at splitoff or process further.