Sell at Split-Off or Process Further Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $11 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $35,700 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $50 per pound. Required: 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off? 2. Conceptual Connection: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS? Should Bozo con nue to sell the HS at split-off or process it further into CS? Process it further into CS

Sell at Split-Off or Process Further Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $11 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $35,700 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $50 per pound. Required: 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off? 2. Conceptual Connection: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS? Should Bozo con nue to sell the HS at split-off or process it further into CS? Process it further into CS

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sell at Split-Off or Process Further Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $14 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $40,800 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $61 per pound. Required: 1. What is the contribution to income from selling the 14,000 pounds of HS at split-off?$fill in the blank 1 2. CONCEPTUAL CONNECTION: What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS?$fill in the blank 2 Should Bozo continue to sell the HS at split-off or process it further into CS?
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $153,000 after processing costs of $42,000. A batch of ALT-2 can be sold for $241,200 after further processing. The cost of ALT-O is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Note: Do not round intermediate calculations. Processing cost
Lido manufactures A and B from a joint process (cost = $80,000). Five thousand pounds of A can be sold at split-off for $20 per pound or processed further at an additional cost of $20,000 and then sold for $25. Ten thousand pounds of B can be sold at split-off for $15 per pound or processed further at an additional cost of $20,000 and later sold for $16. If Lido decides to process B beyond the split-off point, operating income will decrease by _______.
Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals: dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallonsof dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon.Autry has just learned about a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon. Should Autry process dac further? a. No, income will decrease by $1,500. b. No, income will decrease by $5,000. c. Yes, income will increase by $1,500. d. Yes, income will increase by $5,000. e. It doesn't matter; income will be the same.
Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-O. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Processing cost hs
Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals − dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon. Autry has just learned of a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon. Should Autry process dac further? Yes, income will be $1,500 higher. Yes, income will be $5,000 higher. No, income will be $5,000 lower. It doesn't matter; income will be the same. No, income will be $1,500 lower.
Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchase in 1,000-gallon drums for $2,000. Processing costs are $3,000 to process the 1,000 gallons of Duo into 800 gallons of Big and 200 gallons of Mini. The selling price is $9 per gallon for Big and $4 per gallon for Mini. If the sales value at split-off method is used to allocate joint costs to the final products, the per-gallon cost (rounded to the nearest cent) of producing Big is Select one: a. $5.00 per gallon. b. $5.63 per gallon. c. $4.50 per gallon. X d. $3.38 per gallon.
Autry Company manufactures veterinary products. One joint process involves refining a chemical (dactylyte) into two chemicals − dac and tyl. One batch of 5,000 gallons of dactylyte can be converted to 2,000 gallons of dac and 3,000 gallons of tyl at a total joint processing cost of $12,000. At the split-off point, dac can be sold for $3 per gallon and tyl can be sold for $4 per gallon. Autry has just learned of a new process to convert dac into prodac. The new process costs $4,000 and yields 1,700 gallons of prodac for every 2,000 gallons of dac. Prodac sells for $5 per gallon. What is Autry's profit from refining one batch of dactylyte if both dac and tyl are sold at the split-off point? $7,000 $6,000 $15,000 $12,000 $18,000
Mel Corporation manufactures liquid chemicals X and Y from a joint process. Joint costs are allocated on the basis of relative market value at split-off. It costs Php5,000 to process 500 gallons of Product X and 1,000 gallons of Product Y to the split-off point. The market value at split-off is Php10 per gallon for Product X and Php15 for Product Y. Product Y requires an additional process beyond split-off at a cost of Php5 per gallon before it can be sold. What is Mel’s cost to produce 1,000 gallons of Product Y?
Idaho Corporation manufactures liquid chemicals A and B from a joint process. Joint costs are allocated on the basis of relative market value at split-off. It costs 4,560 to process 500 gallons of Product A and 1,000 gallons of Product B to the split-off point. The market value at split-off is 10 per gallon for Product A and 14 for Product B. Product B requires an additional process beyond split-off at a cost of 2 per gallon before it can be sold. What is Idaho's cost to produce 1,000 gallons of Product B? A. 5,040 B. 4,360 C. 4,860 D. 5,360 E. 3,360
Brevall Industries makes corn oil and corn meal from harvested corn in a joint process. Corn oil can be further processed into margarine, and the corn meal can be further processed into corn muffin mix. The joint cost incurred to process the corn to the split-off point is $140,000. Information on the quantities, value, and further processing costs for the joint product appears below: Sales Value Estimated Further Sales Value Quantity At Split-off Processing Cost After Processing Corn Oil 800,000 lbs. $0.30/lb. $0.35/lb. $0.60/lb. Corn Meal 1,600,000 lbs. 0.10/lb. 0.40/lb. 0.55/lb. Brevall allocates the joint cost to the products based on physical units. Corn oil is assigned $46,667 of joint cost and corn meal is assigned $93,333 of joint cost. Which…
Brandon Machines manufactures a number of products from the same raw material. Joint processing costs total $10,000. Product A could be sold at the cut-off point for $18,000 or it can be further processed at a cost of $9,000 and then sold for $35,000. Brandon should: Further process product A because its incremental revenues will exceed incremental costs by $8,000. Further process product A because its incremental revenues will exceed incremental costs by $26,000. Sell as-is because the incremental loss is $2,000 if processed further. Further process product A because its incremental revenues will exceed incremental costs by $16,000. Further process because the incremental revenues will be $35,000.