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Given:
Quality Chicken grows and processes chickens. Each chicken is disassembled
into five main parts. Information pertaining to production in July 2012 is:
Parts
Breasts
Wings
Thighs
Bones
Feathers
Pounds of Product
100
20
40
80
10
$50
SP per
Sales Value Joint Cost Joint Cost
Pound
at Splitoff Pt. Allocated Per Pound
$0.55
$55.00
$33.74
$0.3374
0.20
$4.00
$2.45
$0.1227
0.35
$14.00
$8.59
$0.2147
0.10
$8.00
$4.91
$0.0613
0.05
$0.50
$0.31
$0.0307
$81.50
$50.00
Pounds
Lost
40
15
Insurance
Claim
$13.50
$1.84
$15.34
Joint Cost
Allocated
$20.00
$4.00
$8.00
$16.00
Joint Cost
Per #
$0.2000
$0.2000
$0.2000
$0.2000
Feathers
Total
10
250
$2.00
$50.00
$0.2000
Pounds
Lost
40
15
Insurance
Claim
$8.00
$3.00
$11.00
$0.20
EI in
Pounds
15
4
6
5
2
EI in
Dollars
$5.0613
$0.4908
$1.2883
$0.3067
$0.0613
$7.2086
2. Assume Quality Chicken uses the production method of accounting for byproducts. What are the
EI values for each joint product on July 31, 2012, assuming breasts and thighs are the joint
products and wings, bones, and feathers are byproducts?
Product Pounds of
Produced Product
Breasts
100
Wings
20
Thighs
40
Bones
80
EI in
Pounds
15
4
6
5
EI in
Dollars
$4.4837
$0.8000
$1.1413
$0.5000
Feathers
Total
10
250
$ 0.05
$0.5000
$81.5000
$0.5000
$50.0000
$0.0500
$0.1000
$7.0250
Product
Produced
Breasts
Wings
Thighs
Bones
Feathers
Total
EI in
Pounds
15
4
6
5
2
32
Units
Sold
85
16
34
75
8
218
(1)
Joint Cost
Per #
$0.3374
$0.1227
$0.2147
$0.0613
$0.0307
(1)
Cost of
Goods Sold
$28.680982
$1.963190
$7.300613
$4.601227
$0.245399
$42.791411
(1)
EI in
Dollars
$5.0613
$0.4908
$1.2883
$0.3067
$0.0613
$7.2086
(1)
(2)
Total
Joint Cost
Costs
Per #
$33.7423
$0.2989
$2.4540
$0.2000
$8.5890
$0.1902
$4.9080
$0.1000
$0.3067
$0.0500
$50.0000
Both methods account for all of the $50 of joint manufacturing costs as either COGS or EI.
Both methods are arbitrary and acceptable under GAAP.
(2)
Cost of
Goods Sold
$25.407609
$3.200000
$6.467391
$7.500000
$0.400000
$42.975000
(2)
EI in
Dollars
$4.4837
$0.8000
$1.1413
$0.5000
$0.1000
$7.0250
(2)
Total
Costs
$29.8913
$4.0000
$7.6087
$8.0000
$0.5000
$50.0000
Given:
The Evrett Company operates a simple chemical process to convert a single material into three separate items, referr
at a single splitoff point. Product X and Y are ready for sale immediately upon splitoff without further processing or a
being sold. There is no available market price for Z at the splitoff point.
The selling prices quoted here are expected to remain the same in the coming year. During 2012, the selling prices of
X: 75 tons sold for $1,800 per ton.
Y: 225 tons sold for $1,300 per ton
Z: 280 tons sold for $800 per ton
The total joint manufacturing costs for the year were $328,000. Evrett spent an additional $120,000 to finish product Z
There were no beginning inventories of X, Y, or Z. At the end of the year, the following inventories of completed units
X: 175 tons
Y: 75 tons
Z: 70 tons
There was no beginning or ending work-in-process.
1. Compute the cost of inventories for X, Y, and Z for balance sheet purposes and the cost of goods sold for income s
Relative
Sales
Value
Production
(in Tons)
Separable
Mfg. Costs
Final S. P.
(per Ton)
$450,000
250
$0
$1,800
$390,000
300
$0
$1,300
Estimated
$160,000
350
$120,000
$800
Sales Price
per Ton
$1,800
$1,300
$800
Relative SV
at Split-off
$450,000
$390,000
$160,000
$1,000,000
Joint Cost
Allocated
$147,600
$127,920
$52,480
$328,000
Sales
in Tons
75
225
280
580
EI
in Tons
175
75
70
320
Tons
Produced
250
300
350
900
Products
Produced
X
Y
Z
Total
Sales
in Tons
75
225
280
580
EI
in Tons
175
75
70
320
Tons
Produced
250
300
350
900
Sales Price
per Ton
$1,800
$1,300
$800
$1,120,000
($328,000)
($120,000)
$672,000
60%
Production
Based Sales
$450,000
$390,000
$280,000
$1,120,000
Joint Cost
Allocated (1)
$180,000
$156,000
($8,000)
$328,000
o three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously
thout further processing or any other additional costs. Product Z, however, is processed further before
ng 2012, the selling prices of the items and the total amounts sold were:
Final Sales
Value
$450,000
$390,000
$280,000
Separable
Mfg. Costs
$0
$0
$120,000
$120,000
Total Assigned
Mfg. Costs
$147,600
$127,920
$172,480
$448,000
Cost
per Ton
$590
$426
$493
Cost of Goods
Sold
$44,280
$95,940
$137,984
$278,204
$448,000
Ending
Inventory
$103,320
$31,980
$34,496
$169,796
Actual
Sales $
$135,000
$292,500
$224,000
$651,500
Gross
Margin
$90,720
$196,560
$86,016
$373,296
Separable
Mfg. Costs
$0
$0
$120,000
$120,000
Total Assigned
Mfg. Costs
$180,000
$156,000
$112,000
$448,000
Costs
per Ton
$720
$520
$320
Cost of Goods
Sold
$54,000
$117,000
$89,600
$260,600
$448,000
Ending
Inventory
$126,000
$39,000
$22,400
$187,400
Actual
Sales $
$135,000
$292,500
$224,000
$651,500
Gross
Margin
$81,000
$175,500
$134,400
$390,900
e: The negative joint-cost allocation to Product Z illustrates one "unusual" feature of the constant gross-margin
% NRV method. Some products may receive negative cost allocations in order that all individual products
have the same gross-margin percentage.
Gross
Margin %
67.200%
67.200%
38.400%
Gross
Margin %
60.000%
60.000%
60.000%
Given:
Tasty Inc. is a producer of potato chips. A single production process at Tasty Inc. yields potato chips as the main pro
a byproduct that can also be sold as a snack. Both products are fully processed by the splitoff point, and there are no
costs. For September 2012, the cost of operations is $500,000. Production and sales data are as follows:
Sales (#)
42,640
6,500
Production (#)
52,000
8,500
1. What is the gross margin for Tasty, Inc. under the production method and the sales method of byproduct accountin
Production Method: Byproduct revenue is recognized as a reduction of the joint mfg. costs at time of production.
Product
Produced
Potato
Byproduct
Total
Pounds
EI in
Sold
Pounds
42,640
9,360
6,500
2,000
49,140
11,360
Pounds
SP per Sales Value Joint Cost
Produced Pound at Splitoff Pt. Allocated
52,000
$16
$832,000
$415,000
8,500
$10
$85,000
$85,000
60,500
$917,000
$500,000
Joint Cost
Per Pound
$7.98
$10.00
Note: The byproduct sales of $65,000 (6,500 X $10) and equivalent assigned cost of $65,000 are not displayed as e
Sales Method: Byproduct revenue is recognized at the time of sale.
Product
Produced
Potato
Byproduct
Total
Pounds
EI in
Sold
Pounds
42,640
9,360
6,500
2,000
49,140
11,360
Pounds
SP per Sales Value Joint Cost
Produced Pound at Splitoff Pt. Allocated
52,000
$16
$832,000
$500,000
8,500
$10
$85,000
$0
60,500
$917,000
$500,000
Production Method--Y1
Revenues
Main Product: Potato
By-product:
Snacks
Total Revenues
Cost of Goods Sold
Total mfg. Costs
Deduct byproduct revenue
Net mfg. Costs
Deduct main product inventory (EI)
Total Cost of Goods Sold
Gross Margin
42,640
6,500
8,500
$16
$10
$10
$682,240
$682,240
$500,000
(85,000)
$415,000
(74,700)
$340,300
$341,940
Joint Cost
Per Pound
$9.62
$0.00
Sales Method-- Y1
682,240
65,000
$747,240
$500,000
$500,000
(90,000)
$410,000
$337,240
2. What are the inventory values that should be reported in the balance sheets under each method of byproduct acco
Year 1:
Production Method--Y1
Sales Method-- Y1
9,360 Pounds
2,000 Pounds
$74,700
$20,000
$90,000
0
Overall proof:
Production Method
GP - Y1
Sales - Y2
Main
9,360
ByPd
2,000
Byprod costs
Total Revenues
COGS
GP - Y2
Total Gross Profit
$16
$10
Sales Method
$341,940
$337,240
$149,760
$20,000
(20,000)
$149,760
(74,700)
$75,060
$417,000
$149,760
$20,000
0
$169,760
(90,000)
$79,760
$417,000
$832,000
$85,000
($500,000)
$417,000
$500,000
d of byproduct accounting?
Cost of
Gross
Goods Sold
Margin
$340,300 $ 341,940
$
$
$340,300 $ 341,940
$435,000
$65,000 ?? Under reported COGS
000 are not displayed as either Sales or COGS.
es Method-- Y1
EI in
Sales
Dollars
Dollars
$74,700 $ 682,240
$20,000 $
$94,700 $ 682,240
EI in
Dollars
$90,000
$0
$90,000
Sales
Dollars
$ 682,240
$ 65,000
$ 747,240
65,000
$65,000
85,000
$ 85,000
(15,300)
$69,700
($4,700)
es Method-- Y1
Cost of
Goods Sold
$410,000
$0
$410,000
$500,000
Gross
Margin
$ 272,240
$ 65,000
$ 337,240
($4,700)
$20,000
(15,300)
$4,700
$0
Salting Department
Processed to Af
A
12,000 Pounds
Peanuts Department
Processing
$180,000
Product B Complete
B
65,000 Pounds
Final
Selling
Price
Final
Sales
Value
Separable Separable
Mfg.
Marketing
Costs
Costs (20%)
Desired
Gross
Profit (10%)
Sales
Value
at Splitoff
Allocation Separable
of Joint
Mfg.
Mfg. Costs
Costs
Total
Mfg.
Costs
Total
Mfg.
Costs/#
$27,000
$12
$144,000
$27,000
$0
$117,000
$46,800
$27,000
$73,800
$6.15
49%
$3
$195,000
$0
$0
$195,000
$78,000
$0
$78,000
$1.20
60%
$6
$96,000
$12,000
$19,200
$55,200
$55,200
$12,000
$67,200
$4.20
$4.20
$367,200
$180,000
$39,000
$219,000
$219,000
Total
Mfg.
Costs
Total
Mfg.
Costs/#
$0
150,000 Pounds
Paste Department
Processed to Cf
C (Byproduct)
16,000 Pounds
$12,000
$9,600
2. Compute unit costs per pound for products A, B, and C, treating all three as joint products and allocating costs by the NRV method.
Salting Department
Processed to Af
A
12,000 Pounds
Peanuts Department
Processing
$180,000
Product B Complete
B
65,000 Pounds
Final
Selling
Price
Sales
Value
Separable Separable
Mfg.
Marketing
Costs
Costs (20%)
Sales
Value
at Splitoff
Allocation
of Joint
Mfg. Costs
Separable
Mfg.
Costs
$27,000
$12
$144,000
$27,000
$0
$117,000
$55,892
$27,000
$82,892
$6.91
$3
$195,000
$0
$0
$195,000
$93,153
$0
$93,153
$1.43
$6
$96,000
$12,000
$19,200
$64,800
$30,955
$12,000
$42,955
$2.68
$376,800
$180,000
$39,000
$219,000
$0
150,000 Pounds
Paste Department
Processed to Cf
C
16,000 Pounds
$12,000
Note: Costs of individual products depend heavily on which assumptions are made and which accounting methods and techniques are used.
30%
10%??
Company wants to make a profit of 10%.
Chocolate powder
Milk chocolate
Production
6,000 pounds
10,200 pounds
Sales
6,000 pounds
10,200 pounds
Selling Price
$4
per pound
$5
per pound
Chocolate 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 2012, Chocolate
Factory could have sold the chocolate-powder liquor base for $21 a gallon and the milk-chocolate
liquor base for $26 a gallon.
1. Calculate how the joint costs of $30,000 would be allocated between the chocolate-powder and milk-chocolate liqu
Joint Processing Costs Allocated Using the
Sales Value at the Splitoff Point
Quantity of
Split-off
Product at
Selling
Splitoff Point
Price
$21
600
Gallons
Final SP
$12,750
Separable
Mfg. Costs
$4
6,000
Pounds
Cocoa Beans
processing
$30,000
Joint Mfg. Costs
15,000 Pounds
Milk-Chocolate Liquor Base
Processed to Milk Chocolate
SP @ Splitoff
Final SP
600
21
$26
900
Gallons
$26,250
Separable
Mfg. Costs
$5
10,200
900
26
1,500
Pounds
2. What are the gross-margin percentages of chocolate powder and milk chocolate under each of the above methods
Final Sales
Joint manufacturing costs
Separable manufacturing costs
Gross Margin
Gross Margin %
Overall
Gross
Margin
$75,000
(30,000)
(39,000)
$6,000
8.00%
3. Could Chocolate Factory have increased its operating income by a change in its decision to fully process both of i
Chocolate
Milk
Powder
Chocolate
$24,000
$51,000
12,600
23,400
$11,400
$27,600
(12,750)
(26,250)
($1,350)
$1,350
Yes
Yes
Chocolate-powder liquor base should be
sold at splitoff point. Operating income
would increase by $1,350 to $7,350.
Note: Earlier calculations would change.
(Change G77 to "No" to see changes.)
No
rocessing decision
ery 60 gallons of
ocolate liquor
liquor base yield
Separable
Processing
$12,750
$26,250
powder or milk
12, Chocolate
milk-chocolate
$10,500
6,000
$4
$24,000
$12,750
$11,250
Allocation
of Joint
Mfg. Costs
$9,375
$23,400
$19,500
10,200
$36,000
$30,000
16,200
$5
$51,000
$26,250
$24,750
$20,625
$75,000
$39,000
$36,000
$30,000
Total
$75,000
(30,000)
(39,000)
$6,000
8.000%
Quantity
Joint Processing Costs Allocated Using the
Method
Constant Gross Margin Percentage (8%) NRV Method
Allocation
Quantity of
Final
Final
Joint Cost
Separable
of Joint
Final Product
Selling
Sales
92% of Sales
Mfg.
Mfg. Costs
Produced
Price
Value
Less Separable
Costs
$12,000
6,000
$4
$24,000
$9,330
$12,750
$9,330
$18,000
10,200
$30,000
16,200
$5
$51,000
$20,670
$26,250
$75,000
$30,000
$39,000
$20,670
Problem 16-31 (12th edition): Joint and byproducts, NRV method (CPA)
Given:
The Harrison Corporation produces three products: Alpha, Beta, and Gamma. Alpha and Gamma are joint products,
and Beta is a byproduct of Alpha. No joint costs are to be allocated to the byproduct. The production processes for
a given year are as follows:
a. In Department 1, 110,000 pounds of DM, Rho, are processed at a total cost of $120,000. After processing in Dept. 1
60% of the pounds are transferred to Dept. 2, and 40% of the pounds (now Gamma) are transferred to Depart. #3.
b. In Department 2, the material is further processed at a total additional cost of $38,000. Then 70% of the pounds
(now Alpha) are transferred to Department 4; and 30% emerge as Beta, the byproduct, to be sold at $1.20 per
pound. Separable marketing costs for Beta are $8,100.
c. In Department 4, Alpha is processed at a total additional cost of $23,660. After this processing, Alpha is ready for
sale at $5 per pound.
d. In Department 3, Gamma is processed at a total additional cost of $165,000. In this department, a nornal loss of
Gamma occurs, which equals 10% of the good pounds of output. The remaining good pounds of output are then
sold for $12 per pound.
Department # 4
A
Department # 2
$38,000
D
C
66,000
Pounds
60%
Department #1
B
$120,000
DM Rho is processed
110,000
Pounds
Department #3
$165,000
E
44,000
Pounds
40%
44,000 = 1.1X
X= 44,000/1.1
X = 40,000
1. Prepare a schedule showing the allocation of the $120,000 joint manufacturing costs between Alpha and
Gamma using the NRV method. The NRV of Beta should be treated as an addition to the sales value of Alpha.
Relative sales value at point A:
Relative sales value at point B
Relative sales value at point C
Less Department # 2 separable costs
Relative sales value at point D
Relative sales value at E
Total sales value at 1st splitoff point
Allocation of $120,000 joint mfg. Costs:
To Alpha/Beta Path
To Gamma Path
$207,340
15,660
$223,000
(38,000)
$185,000
315,000
$500,000
$5 X 46,200 - $23,660
$1.20 X 19,800 - $8,100
$44,400
75,600
$120,000
$185,000/$500,000 * $120,000
$315,000/$500,000 * $120,000
2. Independent of your answer to requirement 1, assume that $102,000 of total joint costs were appropriately allocate
Alpha. Assume also that there were 48,000 pounds of Alpha and 20,000 pounds of Beta available to sell. Prepare a
income statement through the gross-margin line item for Alpha using the following facts.
a. During the year sales of Alpha were 80% of the pounds available for sale. There was no beginning inventory of
b. The NRV of Beta available for sale is to be deducted from the cost of producing Alpha. The ending inventory of
Alpha is to be based on the net cost of production.
c. All other costs and selling-price data are listed in A through D above.
Department # 4
A
Department # 2
$38,000
D
Department #1
C
66,000
Pounds
60%
B
$120,000
DM Rho is processed
110,000
Pounds
Department #3
$165,000
E
44,000
Pounds
40%
Sales of Alpha
Less: Cost of Goods Sold
Joint mfg. costs assigned
Separable mfg. costs: Depart. # 4
Separable mfg. costs: Depart. # 2
plus: sales of Byproduct beta
Net mfg. costs
Less ending inventory (20%)
Cost of Goods Sold (80%)
Gross Margin from sales of 80% of Alpha
$192,000
$102,000
$23,660
38,000
(15,900)
$147,760
(29,552)
$118,208
$73,792
.80 X 48,000 X $5
Department # 4
$23,660
Alpha:
$5
46,200
Pounds
70%
Separable
Marketing
Costs
$8,100
Beta:
$1.20
19,800
Pounds
30%
Gamma:
$12
40,000
Pounds
4,000 = 1.1X
= 44,000/1.1
$5 X 46,200 - $23,660
$1.20 X 19,800 - $8,100
$185,000/$500,000 * $120,000
$315,000/$500,000 * $120,000
Department # 4
$23,660
Alpha:
$5
48,000
Pounds
70%
Separable
Marketing
Costs
$8,100
Beta:
$1.20
80 X 48,000 X $5
Gamma:
$12
40,000
Pounds
Department
Cutting
Slicing
Crushing
Juicing
Animal Feed
Costs
Proportion of Product by Weight
Incurred Transferred to Departments
$60,000
--$4,700
35%
$10,580
28%
$3,250
27%
$700
10%
$79,230
100%
Required:
1. The Doe Corporation uses the NRV method to determine inventory values for its main products
and by-product. Calculate:
a. the pounds of pineapple that result as output for pineapple slices, crushed
pineapple, pineapple juice, and animal feed.
b. the net realizable value at the split-off point of the three main products.
c. the amount of cost of the Cutting Department assigned to each of the main
products and to the by-product in accordance with company policy.
d. The total budgeted gross margins for each of the three main products.
e. The anticipated gross margin % for each of the four products
f. The amount of ending inventory valuation for the following units of ending inventory
1. Canned Sliced Pineapples:
4,000
2. Canned Crushed Pineapples:
3,000
3. Canned Pineapple Juice:
2,000
4. Animal Feed:
1,000
2. Comment on the significance to management of the gross margin information calculated above.
3. Discuss how a managers determine whether it is profitable to process a product post split-off.
Solution: Question 1
$4,700
35%
Slicing Department
Final
SP
$0.60
94,500 Pounds
$10,580
28%
Crushing Department
$0.55
75,600 Pounds
Cutting Department
$60,000
270,000 pounds
$3,250
27%
Juicing Department
72,900 Pounds
8% Evaporation Loss
$0.30
X = 72,900 - .08 X
1.08 X = 72,9000
X = 72,900/1.08
67,500 Pounds
$700
10%
Feed Department
$0.10
27,000 Pounds
Products
Produced
Sliced
Crushed
Juice
Animal Feed
Total
Relative SV
at Split-off
$52,000
$31,000
$17,000
$2,000
$102,000
(b)
Joint Cost
Allocated
$30,160
$17,980
$9,860
$2,000
$60,000
(c)
Solution: Question 2
The cost figures determined are based upon an arbitrary cost assignment process. Therefore, these cost figures have no
Such arbitrary cost assignment is used for the financial accounting purposes of inventory valuation and income determinat
Solution: Question 3
Managers must compare incremental revenues with incremental costs. If incremental revenues are greater than incremen
Product Produced
Canned Sliced Pineapples
Cost
per Ton
$0.36889
$0.37778
$0.19422
$0.10000
Total
Cost of
Sales
Goods Sold
$56,700
$34,860
$41,580
$28,560
$20,250
$13,110
$2,700
$2,700
$121,230
$79,230
Gross
Gross
Margin Margin %
$21,840 38.519%
$13,020 31.313%
$7,140 35.259%
$0
0.000%
$42,000 34.645%
(d)
(e)
Ending
Inventory
$1,476
$1,133
$388
$100
$3,097
(f)
refore, these cost figures have no real value for planning and control purposes.
y valuation and income determination.
venues are greater than incremental costs, then the products should be processes further.
Spreadable
Selling price
Butter
per pound of
Tub
Butter
$0.50
$2.50
$2.00
$20,000
20,000
Cups
10,000
Pounds
80,000
Cups
20,000
Quarts
$45,000
$15,000 + $5,000
full-cream milk
10,000
Gallons
$30,000
$1.50
Buttermilk
per quart of
Selling price
2. Allocate the $20,000 joint manufacturing cost to the spreadable butter and the
buttermilk using the
a. Physical-measure method (using cups) of joint cost allocation
(20,000/100,000) X $20,000 =
$4,000
Butter
(80,000/100,000) X $20,000 =
$16,000
Buttermilk
$8,000
Butter
(30,000/50,000) X $20,000 =
$12,000
Buttermilk
$12,000
Butter
(30,000/75,000) X $20,000 =
$8,000
Buttermilk
Butter
$50,000
Buttermilk
$30,000
Costs
Joint mfg. costs
($20,000)
($5,000)
Gross Margin
$55,000
GM Percentage
68.75%
$10,625
Butter
$10,625
Butter
$9,375
Buttermilk
$9,375
Buttermilk
Cost/Tub
$2.50 - (.6875 X $2.50) - ($.50/2) =
$0.5313
$0.4688
Buttermilk
$.90 X 20,000 X 2 =
$36,000
$1.50 X 20,000 =
$30,000
Incremental costs
$.25 X 20,000 X 2 =
Butter
$2.50 X 10000 X 2 =
$50,000
$2.00 X 10,000 =
$20,000
Incremental costs
$6,000
$10,000
$.50 X 10,000 =
$30,000
$5,000
$25,000 Process further
2. If Elsie uses the physical- measure method, what combination of products should
Elsie sell to maximize profits?
Same as question #1
3. Explain the effect that the different cost allocation methods have on the decision
Blouses
Selling price @ split off
$90
Production
Sales
1,500
1,200
$135,000
$108,000
50
$10,500
$300
$15,000
$25,500
Production
Sales
$25
300
260
Scarves
$7,500
$6,500
Required:
1. Assuming SSS accounts for the byproduct using the production method, complete the chart below.
Production method:
Byproduct revenue is recognized as a reduction of the jt. mfg. costs at the time of production.
Products
Units
EI
Units
SP per
Sales Value
Joint Cost
Joint Cost
EI in
Sales
Cost of
Gross
Produced
Sold
Units
Produced
Unit
at Splitoff Pt.
Allocated
Per Unit
Dollars
Dollars
Goods Sold
Margin
Blouses
1,200
300
1,500
$90
Scarves
260
40
300
$25
$135,000
Total
$18,000
$12.00
$3,600
$7,500
$7,500
$25.00
$1,000
$142,500
$25,500
$4,600
108,000
108,000
$14,400
$
$14,400
93,600
$
$
93,600
2. Assuming SSS accounts for the byproduct using the sales method, complete the chart below.
Sales Method: Byproduct revenue is recognized at the time of sale.
Products
Units
EI
Units
SP per
Sales Value
Joint Cost
Joint Cost
EI in
Sales
Cost of
Gross
Produced
Sold
Units
Produced
Unit
at Splitoff Pt.
Allocated
Per Unit
Dollars
Dollars
Goods Sold
Margin
Blouses
1,200
300
1,500
$90
Scarves
260
40
300
$25
Total
$135,000
$25,500
$17.00
$7,500
$0
$0.00
$142,500
$25,500
$5,100
$0
$5,100
108,000
$20,400
87,600
6,500
$0
6,500
114,500
$20,400
94,100
3. Complete the following journal entries for September assuming SSS accounts for the byproduct using (a) the production method and (b) the sales
method. If no entry is needed, indicate that that is the case by putting "NE" in the amount column. Use the following accounts:
Account #
Account name
Account #
Account name
Account #
Account name
12
18
14
20
16
Miscellaneous Accounts
22
WIP, Inventory
10
Sales Method
Debit
Credit
Debit
Credit
Debit
Credit
Account #
Account #
Amount ($)
Amount ($)
Amount ($)
Amount ($)
10
15,000
4
15,000
15,000
15,000
b. Give the journal entry to record the use of the silk bolts
WIP, Inventory
22
15,000
10
15,000
15,000
15,000
22
Miscellaneous Accounts
10,500
16
10,500
10,500
10,500
12
14
WIP, Inventory
18,000
25,500
7,500
22
25,500
25,500
14,400
12
20,400
14,400
20,400
108,000
18
108,000
108,000
108,000
NE
20
NE
NE
NE
6,500
14
20
6,500
6,500
6,500