Você está na página 1de 38

Problem 16-16: Joint-cost allocation, insurance settlement.

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

Final Wholesale SP/Pound


$0.55
0.20
0.35
0.10
0.05

Joint cost of production in July 2012 was $50.

$50

A special shipment of 40 pounds of breasts and 15 pounds of wings has been


destroyed in a fire. Quality Chicken's insurance policy provides reimbursement
for the cost of the items destroyed. The insurance company permits Quality
Chicken to use a joint-cost-allocation method. The splitoff point is assumed to
be at the end of the production process.
1. Compute the cost of the special shipment destroyed using
a. Sales value at the splitoff method
Product Pounds of
Produced
Product
Breasts
100
Wings
20
Thighs
40
Bones
80
Feathers
10
Total
250

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

Cost of destroyed Product


Product Joint Cost
Produced Per Pound
Breasts:
$0.3374
Wings
$0.1227
Total

Pounds
Lost
40
15

Insurance
Claim
$13.50
$1.84
$15.34

b. Physical measures method


Product Pounds of
Produced
Product
Breasts
100
Wings
20
Thighs
40
Bones
80

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

Cost of destroyed Product


Product Joint Cost
Produced Per Pound
Breasts:
$0.2000
Wings
$0.2000
Total

2. What is joint-cost allocation would you recommend?


Sales value at the splitoff method generates the higher
insurance recovery value.

Problem 16-17 Joint products and byproducts (continuation of 16-16)


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 Final Wholesale SP/Pound


100
$0.55
20
0.20
40
0.35
80
0.10
10
0.05

Joint cost of production in July 2012 was $50.


Quality Chicken is computing the EI values for its July 31, 2012, balance sheet. EI amounts on July 31
are:
Parts
Pounds of Product
Breasts
15
Wings
4
Thighs
6
Bones
5
Feathers
2
Quality Chicken's management wants to use the sales value at splitoff method. However, management
wants you to explore the effect on ending inventory values of classifying one or more products as a
byproduct rather than a joint product.
1. Compute the cost of the ending inventory if all products are accounted for as joint products.
The sales values at the split-off point is used to assign joint manufacturing costs.
Product Pounds of
Produced Product
Breasts
100
Wings
20
Thighs
40
Bones
80
Feathers
10
Total
250

SP per Sales Value


Pound at Splitoff Pt.
$0.55
$55.00
$ 0.20
$4.00
$ 0.35
$14.00
$ 0.10
$8.00
$ 0.05
$0.50
$81.50

Joint Cost Joint Cost


Allocated
Per #
$33.7423
$0.3374
$2.4540
$0.1227
$8.5890
$0.2147
$4.9080
$0.0613
$0.3067
$0.0307
$50.0000

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

SP per Sales Value


Pound at Splitoff Pt.
$0.55
$55.0000
$ 0.20
$4.0000
$ 0.35
$14.0000
$ 0.10
$8.0000

Joint Cost Joint Cost


Allocated
Per #
$29.8913
$0.2989
$4.0000
$0.2000
$7.6087
$0.1902
$8.0000
$0.1000

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

3. Comment on the differences between the two methods.

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

Problem 16-20: Alternative methods of joint-cost allocation, ending inventories.

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

Joint Mfg. Costs


$328,000

a. NRV method of joint-cost allocation


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

b. Constant gross-margin % NRV method of joint-cost allocation

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

Calculation of Overall Gross Margin:


Production based Sales
Joint Manufacturing Costs
Separable Manufacturing Costs
Gross Margin
Gross Margin %

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

(1) Note: The negative joint-cost alloca


% NRV method. Some produ
have the same gross-margin

Sales - GP - Separable Costs = Joi

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:

l $120,000 to finish product Z.

ventories of completed units were on hand:

st of goods sold for income statement purposes as of 12/31/12, using

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.

s - GP - Separable Costs = Joint Cost Allocated

Gross
Margin %
67.200%
67.200%
38.400%

Gross
Margin %
60.000%
60.000%
60.000%

Problem 16-24: Accounting for a main product and a byproduct

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 (#)

Main Product: Potato Chips


Byproduct

52,000
8,500

Selling Price per #


16
10

There were no beginning inventories.

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

EI of Main Product (Potato)


EI of By-product

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

Proof: Both Years Together


Sales
Main
52,000
$16
ByPd
8,500
$10
Jt. Mfg. Costs
Total Gross Profit

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

ato chips as the main product and


off point, and there are no separable
re as follows:

$500,000

elling Price per #

d of byproduct accounting?

sts at time of production.

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

Difference (SM - PM)

65,000
$65,000

85,000
$ 85,000
(15,300)
$69,700
($4,700)

method of byproduct accounting.

es Method-- Y1

Cost of
Goods Sold
$410,000
$0
$410,000
$500,000

Gross
Margin
$ 272,240
$ 65,000
$ 337,240

Difference (SM - PM)

($4,700)

$20,000
(15,300)
$4,700
$0

Problem 16-25: Joint Costs & Byproducts


Given:
Royston, Inc. is a large food processing company. It processes 150,000 pounds of peanuts in the
Peanuts Department at a cost of $180,000 to yield 12,000 pounds of product A, 65,000 pounds of
product B, and 16,000 pounds of product C.
Product A is processed further in the Salting Department to yield 12,000 pounds of salted peanuts at
a cost of $27,000 and sold for $12 per pound.
Product B (Raw Peanuts) is sold without further processing at $3 per pound.
Product C is considered a byproduct and is processed further in the Paste Department to yield 16,000
pounds of peanut butter at a cost of $12,000 and sold for $6 per pound.
The company wants to make a gross margin of 10% of revenues on Product C and needs to allow
20% of revenues for marketing costs on product C.
1. Compute unit costs per pound for products A, B, and C, treating C as a byproduct. Use the NRV
method for allocating joint costs. Deduct the NRV of the byproduct produced from the joint cost
of products A and B (Production 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

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%.

Problem 16-28: Comparison of alternative joint-cost-allocation methods, further-processing decision


Given:
The Chocolate Factory manufactures and distributes chocolate products. It purchases cocoa beans
and processes them into two intermediate products: Chocolate-powder liquor base and Milkchocolate liquor base. These two intermediate products become separately identifiable at a single
splitoff point. Every 1,500 pounds of cocoa beans yields 60 gallons of chocolate-powder liquor base
and 90 gallons of milk-chocolate liquor base.
The chocolate-powder liquor base is further processed into chocolate powder. Every 60 gallons of
chocolate-powder liquor base yield 600 pounds of chocolate powder. The milk-chocolate liquor
base is further processed into milk chocolate. Every 90 gallons of milk-chocolate liquor base yield
1,020 pounds of milk chocolate.
Production and sales data for August 2012 are (assume no beginning inventory):
Coco beans processed, 15,000 pounds
Costs of processing cocoa beans to splitoff point (including purchase of beans), $30,000

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

Chocolate Powder Liquor


Processed to Chocolate Powder
SP @ Splitoff

$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%

Relative Sales Value at Spiltoff


Chocolate
Milk
Powder
Chocolate
$24,000
$51,000
(10,500)
(19,500)
(12,750)
(26,250)
$750
$5,250
3.125%
10.294%

3. Could Chocolate Factory have increased its operating income by a change in its decision to fully process both of i

Final Sales Value


Sales Value at Splitoff
Increase in Sales Value
Separable manufacturing costs
Incremental operating income
Process further

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

ases cocoa beans


e and Milkfiable at a single
owder liquor base

ery 60 gallons of
ocolate liquor
liquor base yield

Separable
Processing
$12,750
$26,250

powder or milk
12, Chocolate
milk-chocolate

ate-powder and milk-chocolate liquor bases:

ssing Costs Allocated Using the


Joint Processing Costs Allocated Using the
Value at the Splitoff Point
Net Realizable Value at the Splitoff Point
Sales
Allocation
Quantity of
Final
Final
Separable
NRV
Value
of Joint
Final Product
Selling
Sales
Mfg.
at
at Splitoff Mfg. Costs
Produced
Price
Value
Costs
Splitoff
$12,600

$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

e under each of the above methods?

les Value at Spiltoff


Total
$75,000
(30,000)
(39,000)
$6,000
8.000%

NRV at the Splitoff Point


Quantity Method
Chocolate
Milk
Chocolate
Milk
Powder
Chocolate
Total
Powder
Chocolate
$24,000
$51,000
$75,000
$24,000
$51,000
(9,375)
(20,625)
(30,000)
(12,000)
(18,000)
(12,750)
(26,250)
(39,000)
(12,750)
(26,250)
$1,875
$4,125
$6,000
($750)
$6,750
7.813%
8.088%
8.000%
-3.125%
13.235%

s decision to fully process both of its intermediate products?


Both
Products
$75,000
36,000
$39,000
(39,000)
$0

der liquor base should be


oint. Operating income
by $1,350 to $7,350.
alculations would change.
o "No" to see changes.)

Total
$75,000
(30,000)
(39,000)
$6,000
8.000%

Constant Gross Margin Meth


Chocolate
Powder
$24,000
(9,330)
(12,750)
$1,920
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

Constant Gross Margin Method


Milk
Chocolate
Total
$51,000
$75,000
(20,670)
(30,000)
(26,250)
(39,000)
$4,080
$6,000
8.000%
8.000%

$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

Beta is a byproduct of Alpha

110,000
Pounds
Department #3
$165,000
E
44,000
Pounds
40%

Waste = 10% of Good Output


Let X = good output
44,000 - 0.1X = X

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

$12 X 40,000 - $165,000

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

Beta is a byproduct of Alpha

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

$1.20 X 20,000 - $8,100

ha and Gamma are joint products,


ct. The production processes for

20,000. After processing in Dept. 1,


ma) are transferred to Depart. #3.

8,000. Then 70% of the pounds


oduct, to be sold at $1.20 per

his processing, Alpha is ready for

his department, a nornal loss of


good pounds of output are then

Department # 4
$23,660

Alpha:
$5
46,200
Pounds
70%

Separable
Marketing
Costs
$8,100

Beta:
$1.20

Beta is a byproduct of Alpha

10% of Good Output


X = good output
000 - 0.1X = X

19,800
Pounds
30%

Gamma:
$12
40,000
Pounds

4,000 = 1.1X
= 44,000/1.1

osts between Alpha and


n to the sales value of Alpha.

$5 X 46,200 - $23,660
$1.20 X 19,800 - $8,100

$12 X 40,000 - $165,000

$185,000/$500,000 * $120,000
$315,000/$500,000 * $120,000

t costs were appropriately allocated to


of Beta available to sell. Prepare an

re was no beginning inventory of Alpha


g Alpha. The ending inventory of

Department # 4
$23,660

Alpha:
$5
48,000
Pounds
70%

Separable
Marketing
Costs
$8,100

Beta:
$1.20

Beta is a byproduct of Alpha


20,000
Pounds
30%

80 X 48,000 X $5

$1.20 X 20,000 - $8,100

Gamma:
$12
40,000
Pounds

Chapter 16 Problem: Accounting for A Joint Manufacturing Process


Doe Corporation grows, processes, cans, and sells three main pineapple products -- sliced
pineapple, crushed pineapple, and pineapple juice. The outside skin is cut off in the Cutting
Department and processed as animal feed. The skin is treated as a by-product. Doe's
production process is as follows:
1. Pineapples first are processed in the Cutting Department. The pineapples are washed and
the outside skin is cut away. Then the pineapples are cored and trimmed for slicing. The
three main products and the by-product are recognized after processing in the Cutting
Department. Each product is then transferred to a separate department for final processing.
2. The trimmed pineapples are forwarded to the Slicing Department where the pineapples are
sliced and canned. Any juice generated during the slicing operation is packed in the cans
with the slices.
3. The pieces of pineapple trimmed from the fruit are diced and canned in the Crushing Department
Again, the juice generated during this operation is packed in the can with the crushed pineapple.
4. The core and surplus pineapple generated from the Cutting Department are pulverized into
a liquid in the Juicing Department. There is an evaporation loss equal to 8% of the weight
of the good output produced in this department which occurs as the juices are heated.
5. The outside skin is chopped into animal feed in the Feed Department.
The Doe Corporation uses the net realizable value method (relative sales value method) to
assign costs of the joint process to its main products. The by-product is inventoried at its
market value.
A total of 270,000 pounds were entered into the Cutting Department during May. The
schedule presented below shows the costs incurred in each department, the proportion by
weight transferred to the four final processing departments, and the selling price of each end
product.
Processing Data and Costs for the Month of May

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%

Selling Price Per Pound


of Final Product
--$0.60
$0.55
$0.30
$0.10

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

Separable Mfg. Costs

Final
SP
$0.60

94,500 Pounds

$10,580
28%

Crushing Department

Separable Mfg. Costs

$0.55

75,600 Pounds
Cutting Department
$60,000
270,000 pounds
$3,250
27%

Juicing Department

72,900 Pounds
8% Evaporation Loss

Separable Mfg. Costs

$0.30

X = 72,900 - .08 X
1.08 X = 72,9000
X = 72,900/1.08
67,500 Pounds
$700

10%

Feed Department

Separable Mfg. Costs

$0.10

27,000 Pounds
Products
Produced
Sliced
Crushed
Juice
Animal Feed
Total

Pounds Sales Price


Produced
per Ton
94,500
$0.60
75,600
$0.55
67,500
$0.30
27,000
$0.10
264,600
(a)

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)

Separable Total Assigned


Mfg. Costs
Mfg. Costs
$4,700
$34,860
$10,580
$28,560
$3,250
$13,110
$700
$2,700
$19,230
$79,230

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

Canned Crushed Pineapples

Canned Pineapple Juice

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.

Problem 16-30: Joint-cost allocation.


Elsie Diary Products Corp buys one input, full-cream milk, and refines it. This churning process
from each gallon of milk produces 2 cups (1 pound) of butter and 2 quarts (8 cups) of buttermilk.
During May 2011, Elsie bought 10,000 gallons of full-cream milk for $15,000. Elsie spent another
$5,000 on the churning process to separate the milk into butter and buttermilk. Butter could be
sold immediately for $2 per pound and buttermilk could be sold immediately for $1.50 per quart.
Elisie chooses to process the butter further into spreadable butter by mixing it with canola oil,
incurring an additional cost of $.50 per pound. This process results in 2 tubs of spreadable
butter for each pound of butter processed. Each tub of spreadable butter sells for $2.50.
Required:
1. Diagram the churning production process.
Churning Process

Selling Price per


Processing

Spreadable

Selling price

Cost per pound of butter

Butter

per pound of

Mixing with Canola Oil

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

b. Sales value at splitoff method of joint cost allocation


(20,000/50,000) X $20,000 =

$8,000

Butter

(30,000/50,000) X $20,000 =

$12,000

Buttermilk

c. NRV method of joint cost allocation


(45,000/75,000) X $20,000 =

$12,000

Butter

(30,000/75,000) X $20,000 =

$8,000

Buttermilk

d. Constant gross margin percentage method of joint cost allocation


Sales:

Butter

$50,000

Buttermilk

$30,000

Costs
Joint mfg. costs

($20,000)

Separable mfg. costs

($5,000)

Gross Margin

$55,000

GM Percentage

68.75%

$50,000 - (.6875 X $50,000) - ($.50 X 10,000) =


$50,000 - $34,375 - $5,000 =

$10,625

Butter

$10,625

Butter

$9,375

Buttermilk

$9,375

Buttermilk

Cost/Tub
$2.50 - (.6875 X $2.50) - ($.50/2) =

$0.5313

$30,000 - (.6875 X $30,000) =


Cost/Quart
$1.50 - (.6875 X $1.50) =

$0.4688

Problem 16-31: Further processing decision (continuation of 16-30)


Elsie has decided that buttermilk may sell better if it was marketed for baking and sold in pints.
This would involve additional packaging at an incremental cost of $.25 per pint. Each pint could
be sold for $.90 (Note: 1 quart = 2 pints).
1. If Elsie uses the sales value at splitoff method, what combination of products should
Elsie sell to maximize profits?
Incremental sales value

Buttermilk

Final sales value

$.90 X 20,000 X 2 =

$36,000

Current sales value

$1.50 X 20,000 =

$30,000

Incremental costs

$.25 X 20,000 X 2 =

Disadvantage of further processing


Incremental sales value

($4,000) Do not process further

Butter

Final sales value

$2.50 X 10000 X 2 =

$50,000

Current sales value

$2.00 X 10,000 =

$20,000

Incremental costs

$6,000
$10,000

$.50 X 10,000 =

Benefit of further processing

$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

to sell the products at split off or to process them further.


The method of joint manufacturing cost allocation has no effect on the process further decision.

Problem 16-35: Accounting for a byproduct


Given:
Sanjana's Silk Shirts (SSS) hand-makes blouses and sells them to high-end department stores. SSS buys bolts of silk for $300 each. Out of each bolt
it gets 30 blouses, which it sells for $90 each. SSS's new manager has suggested taking the scraps left after cutting out the blouses and using them
to make scarves. By carefully cutting the blouses, SSS can produce 6 scarves from each bolt, which it can sell for $25 each. During September, SSS
buys 50 bolts of silk and spends an additional $10,500 on the cutting and sewing process. By the end of the month, SSS sells 1,200 blouses and 260
scarves made from these bolts. Because the scarves are lower in value than blouses, SSS decides to treat the scarves as a byproduct.

Blouses
Selling price @ split off

$90

Production

Sales

1,500

1,200

$135,000

$108,000

Joint Mfg. Costs


conversion costs added =
silk bolts =

50

$10,500
$300

$15,000
$25,500
Production

Selling price @ split off

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

Cash (or A/R, or A/P)

12

FG, Inventory -- Blouses

18

Sales Revenue -- Blouses

Cost of Goods Sold -- Blouses

14

FG, Inventory -- Scarves

20

Sales Revenue -- Scarves

Cost of Goods Sold -- Scarves

16

Miscellaneous Accounts

22

WIP, Inventory

10

Direct Materials Inventory


Production Method

Always select the best possible account.

Sales Method

Debit

Credit

Debit

Credit

Debit

Credit

Account #

Account #

Amount ($)

Amount ($)

Amount ($)

Amount ($)

a. Give the journal entry to record the purchase of silk bolts


Direct Materials Inventory

10

Cash (or A/R, or A/P)

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

Direct Materials Inventory

15,000
10

15,000
15,000

15,000

c. Give the journal entry to assign conversion costs


WIP, Inventory

22

Miscellaneous Accounts

10,500
16

10,500
10,500

10,500

d. Give the JE to record the cost of goods manufactured


FG, Inventory -- Blouses

12

FG, Inventory -- Scarves

14

WIP, Inventory

18,000

25,500

7,500
22

25,500

25,500

e. Give the JE to record the COGS associated with sales of blouses


Cost of Goods Sold -- Blouses

FG, Inventory -- Blouses

14,400
12

20,400
14,400

20,400

f. Give the JE to record the sales of blouses


Cash (or A/R, or A/P)

Sales Revenue -- Blouses

108,000
18

108,000
108,000

108,000

e. Give the JE to record the COGS associated with sales of scarves


Cost of Goods Sold -- Scarves

FG, Inventory -- Scarves

NE
20

NE
NE

NE

f. Give the JE to record the sales of scarves


Cash (or A/R, or A/P)

6,500

FG, Inventory -- Scarves

14

Sales Revenue -- Scarves

20

6,500
6,500
6,500

Você também pode gostar