NO.

16-16
1. a. Sales value at splitoff method:

Punds of product Wholesale selling price per pound Sales value at Splitoff
Breasts 100 0.55 55.00
Wings 20 0.20 4.00
Thighs 40 0.35 14.00
Bones 80 0.10 8.00
Feathers 10 0.05 0.50
250 $ 81.50

Costs of Destroyed Product

Breasts: $0.3375 per pound × 40 pounds = 13.50
Wings: $0.1225 per pound × 15 pounds = $ 1.84
$ 15.34

b. Physical measure method:

Punds of product Weighting: physical measure Joint cost allocated

Breasts 100 0.400 20.00
Wings 20 0.080 4.00
Thighs 40 0.160 8.00
Bones 80 0.320 16.00
Feathers 10 0.040 2.00
250 1.000 $ 50.00

Costs of Destroyed Product

Breast: $0.20 per pound × 40 pounds = 8
Wings: $0.20 per pound × 15 pounds = $ 3
$ 11

NO. 16-17

1. Ending inventory:
Breasts 15 X 0.3374= $5.06
Wings 4 X 0.1227= $0.49
Thighs 6X 0.2147= $1.29
Bones 5X 0.0613= $0.31
Feathers 2X 0.0307= $0.06
$7.21
2. Joint products Byproducts Net Realizable Values of byproducts:
Breast Wings Wings 4.00
Thighs Bones Bones 8.00
Feathers Feathers 0.50
12.50

Joint costs to be allocated:

Joint Costs – Net Realizable Values of Byproducts = $50 – $12.50 = $37.50

Pounds of product Wholesale selling price per pound

Breast 100 0.55
Thighs 40 0.35

Ending inventory:
Breast 15X 0.2989 = 4.48
Thighs 6X 0.1902 = 1.14
$ 5.63

NO. 16-18

Corn Syrup Corn Starch

Final sales value of total production,
13000 X 51 ; 5900 X 26 663000 153400
Deduct separable costs 406340 97060
Net realizable value at splitoff point 256660 56340
Weighting, 256660 ; 56340÷ 313000 0.82 0.18
Join cost allocation, 0.82 ; 0.18 X 329000 269780 59220

Processing
$406,340

Processing
$329,000

Processing
$97,060
 Splitoff

NO. 16-19

Methanol
1. Physical measure of total production (gallons) 2500
Weighting, 2,500; 7,500 ÷ 10000 0.25
Joint costs allocated, 0.25; 0.75 × $120,000 30000

2. Methanol
Final sales value of total production,
2,500 × $21.00; 7,500 × $14.00 52500
Deduct separable costs,
2,500 × $3.00; 7,500 × $2.00 7500
Net realizable value at splitoff point 45000
Weighting, $45,000; $90,000 ÷ $135,000 0.333
Joint costs allocated, 1/3; 2/3 × $120,000 40000

3. Methanol
Revenues 52500
Cost of goods sold:
Joint costs 30000
Separable costs 7500
Total cost of goods sold 37500
Gross margin 15000

4. Alcohol Bev
Final sales value of total production,
2,500 × $60.00; 7,500 × $14.00 150000
Deduct separable costs,
(2,500 × $12.00) + (0.20 × $150,000); 7,500 × $2.00 60000
Net realizable value at splitoff point 90000
Weighting, $90,000; $90,000 ÷ $180,000 0.50
Joint costs allocated, 0.5; 0.5 × $120,000 60000

An incremental approach demonstrates that the company should use the new process:
Incremental revenue,
($60.00 – $21.00) × 2,500 97500
Added processing, $9.00 × 2,500 22500
Taxes, (0.20 × $60.00) × 2,500 30000 52500
Incremental operating income from
 further processing 45000

Separable Costs
Join cost
2,500 Processing
gallons $3 per gallon

Processing $120,000
for 10,000 gallons

7,500 Processing
gallons $2 per gallon

Splitoff
Sales value at Splitoff Weighting: Sales value at Splitoff Joint cost allocated Allocated cost per pound
55.00 0.675 33.74 0.3374
4.00 0.049 2.45 0.1227
14.00 0.172 8.59 0.2147
8.00 0.098 4.91 0.0613
0.50 0.006 0.31 0.0307
81.50 1.000 $ 50.00

Allocated cost per pound

0.200
0.200
0.200
0.200
0.200
 Sales value at Splitoff Weighting: Sales value at Splitoff Joint cost allocated Allocated cost per pound
55.00 0.797 29.89 0.2989
14.00 0.203 7.61 0.1902
69.00

Corn Starch Total

153400 816400
97060 503400
56340 313000
0.18 1.00
59220 329000

Corn Syrup: 13,000

cases at $51 per case

Corn Starch: 5,900

cases at $26 per case
 Turpentine Total
7500 10000
0.75
90000 120000

Turpentine Total

105000 157500

15000 22500
90000 135000
0.667
80000 120000

Turpentine Total
105000 157500

90000 120000
15000 22500
105000 142500
0 15000

Turpentine Total

105000 255000

15000 75000
90000 180000
0.50
60000 120000

d use the new process:

 Methanol: 2,500
gallons at $21 per gallon

Turpentine: 7,500
gallons at $14 per gallon
ted cost per pound
0.2989
0.1902
 No.16-21

ICR8 Processing
(Non-Saleable) $175

Joint Costs = ING4 Processing

$1,800 (Non-Saleable) $105

XGE3 Processing
(Non-Saleable) $210

1. A). Physical Measure Method

Crude Oil NGL

1. Physical measure of total prodn. 150 50
2. Weighting (150; 50; 800 ÷ 1,000) 0.15 0.05
3. Joint costs allocated (Weights × $1,800) 270 90

B). NRV Method

Crude Oil NGL

1. Final sales value of total production 2700 750
2. Deduct separable costs 175 105
3. NRV at splitoff 2525 645
4. Weighting (2,525; 645; 830 ÷ 4,000) 0.63125 0.16125
5. Joint costs allocated (Weights × $1,800) 1136.25 290.25

2.
A). Physical Measure Method

Crude Oil NGL

Revenues 2700 750
Cost of goods sold
Joint costs 270 90
Separable costs 175 105
Total cost of goods sold 445 195
Gross margin 2255 555

B). NRV Method

Crude Oil NGL
 Revenues 2700.00 750.00
Cost of goods sold
Joint costs 1136.25 290.25
Separable costs 175.00 105.00
Total cost of goods sold 1311.25 395.25
Gross margin 1388.75 354.75

No.16-22
1.
a. Sales value at splitoff method

PANEL A: Allocation of Joint Costs using Sales

Value at Splitoff Method Special B/ Beef Ramen
Sales value of total production at splitoff point
(20,000 tons × $5 per ton; 28,000 × $20 per ton) 100000
Weighting ($100,000; $560,000 ÷ $660,000) 0.15
Joint costs allocated (0.15; 0.85 × $400,000) 60000

PANEL B: Product-Line Income Statement for June 2014 Special B Special S

Revenues (25,000 tons ×$17 per ton; 34,000 ×$33 per ton) 425000 1122000
Deduct joint costs allocated (from Panel A) 60000 340000
Deduct separable costs 100000 238000
Gross margin 265000 544000
Gross margin percentage 0.62 0.48

b. Physical-measure method
PANEL A: Allocation of Joint Costs using Net Realizable
Value Method Special B/ Beef Ramen
Physical measure of total production (tons) 20000
Weighting (20,000 tons; 28,000 tons ÷ 48,000 tons) 0.42
Joint costs allocated (0.42; 0.58 × $400,000) 168000

PANEL B: Product-Line Income Statement for June 2014 Special B Special S

Revenues (25,000 tons ×$17 per ton; 34,000 ×$33 per ton) 425000 1122000
Deduct joint costs allocated (from Panel A) 168000 232000
Deduct separable costs 100000 238000
Gross margin 157000 652000
Gross margin percentage 0.37 0.58
 c. Net realizable value method
PANEL A: Allocation of Joint Costs using Net Realizable
Value Method Special B Special S
Final sales value of total production during accounting period
(25,000 tons ×$17 per ton; 34,000 ×$33 per ton) 425000 1122000
Deduct separable costs 100000 238000
Net realizable value at splitoff point 325000 884000
Weighting ($325,000; $884,000 ÷ $1,209,000) 0.27 0.73
Joint costs allocated (0.27; 0.73 × $400,000) 108000 292000

PANEL B: Product-Line Income Statement for June 2014 Special B Special S

Revenues (25,000 tons ×$17 per ton; 34,000 ×$33 per ton) 425000 1122000
Deduct joint costs allocated (from Panel A) 108000 292000
Deduct separable costs 100000 238000
Gross margin 217000 592000
Gross margin percentage 0.51 0.53

2.
PANEL A: allocation of Joint Costs using Sales Value at Splitoff Special B/ Beef Ramen
Sales value of total production at splitoff point
(20,000 tons × $5 per ton; 28,000 × $20 per 100000
ton; 6,000 × $4 per ton)
Weighting
($100,000; $560,000; $24,000 ÷ $684,000) 15%
Joint costs allocated
(0.146199; 0.818713; 0.035088 × $400,000) 58480
Processing Crude Oil 150
$175 bbls × $18 / bbl = $2,700

Processing NGL 50
$105 bbls × $15 / bbl = $750

Processing Gas 800 eqvt bbls ×

$210 $1.30 / eqvt bbl = $1,040

Gas Total
800 1000
0.80 1.00
1440 1800

Gas Total
1040 4490
210 490
830 4000
0.20750
373.50 1800

Gas Total
1040 4490

1440 1800
210 490
1650 2290
-610 2200

Gas Total
 1040.00 4490.00

373.50 1800.00
210.00 490.00
583.50 2290.00
456.50 2200.00

Special S/ Shrimp Ramen Total

560000 660000
0.85
340000 400000

Total
1547000
400000
338000
809000
0.52

Special S/ Shrimp Ramen Total

28000 48000
0.58
232000 400000

Total
1547000
400000
338000
809000
0.52
 Total

1547000
338000
1209000

400000

Total
1547000
400000
338000
809000
0.52

Special S/ Shrimp Ramen Stock Total

560000 24000 684000

82% 4% 100%

327485 14035 400000

 No. 16-27

1. Net realizable value of human product:

(2,000 gallons × $585) – $120,000 =
Net realizable value of veterinarian product:
500 gallons × ($410 – $10) =
Joint costs: $60,000 + $90,000 = $150,000
Joint costs charged to human product: 1,050,000 × $150,000 =
1,250,000
Joint costs charged to veterinarian product: 200000 × $150,000 =
1250000

2.
Human Product
Separable costs, $120,000; 500 × $10 120000
Joint costs (from above) 126000
Total costs 246000
Units produced (gallons) 2000
Cost per gallon $246,000 ÷ 2,000; $29,000 ÷ 500 123
Units in ending inventory (gallons) 300
Cost of ending inventory $123 × 300; $58 × 200 36900

3.
Final gross margin: NRV (Human) + NRV (Vet) – Joint costs
= $1,050,000 + $200,000 – $150,000 =
Final sales revenues:
(2,000 × $585) + (500 × $410) =
Final gross margin percentage: $1,100,000 =
$1,375,000

Constant gross-margin percentage NRV method Human Product

Final sales value of production
$2,000 × 585; $410 × 500 1170000
Gross Margin (80%) 936000
Total costs 234000
Separable costs 120000
Joint costs 114000

4.
In March, Tivoli sold 1,700 gallons for human use for a sales revenue of: 1,700 × $585 =

Under the constant gross-margin percentage NRV method, each product is provided a gross
margin of 80%. Therefore, the gross margin for the sale of human product in March is:
 $994,500 × 80% = 795600

5.
Revenue from accepting the offer: 6000
Cost of modification (300 pints × $30): 9000
Net Inflow: -3000
Add: Cost saving from not having to dispose of toxic byproduct 5000
Total benefit from offer: 2000

Tivoli should therefore accept the offer because its net income will increase by $2,000 as a result.

No. 16-28
1. Computation of joint-cost allocation proportions:
A).
Sales Value of Total Production at Splitoff Weighting Allocation of $105,000 Joint Costs
A 75000 0.30 31500
B 62500 0.25 26250
C 45000 0.18 18900
D 67500 0.27 28350
250000 1.00 105000

B).
Physical Measure of Total Production Weighting Allocation of $105,000 Joint Costs
A 275000 0.55 57750
B 100000 0.20 21000
C 75000 0.15 15750
D 50000 0.10 10500
500000 1.00 105000

C).
Final Sales Value of Total Production Separable Costs Net Realizable Value at Splitoff
Super A 375000 240000 135000
Super B 150000 60000 90000
C 45000 - 45000
Super D 75000 45000 30000
300000

Computation of gross-margin percentages:

A). Sales value at splitoff method:

Super A Super B C Super D Total
 Revenues 375000 150000 45000 75000 645000
Joint costs 31500 26250 18900 28350 105000
Separable costs 240000 60000 0 45000 345000
Total cost of goods sold 271500 86250 18900 73350 450000
Gross margin 103500 63750 26100 1650 195000
Gross-margin percentage 27.60% 42.50% 58.00% 2.20% 30.23%

B). Physical-measure method:

Super A Super B C Super D Total
Revenues 375000 150000 45000 75000 645000
Joint costs 57750 21000 15750 10500 105000
Separable costs 240000 60000 0 45000 345000
Total cost of goods sold 297750 81000 15750 55500 450000
Gross margin 77250 69000 29250 19500 195000
Gross-margin percentage 20.6% 46.0% 65.0% 26.0% 30.2%

C). Net realizable value method:

Super A Super B C Super D Total
Revenues 375000 150000 45000 75000 645000
Joint costs 47250 31500 15750 10500 105000
Separable costs 240000 60000 0 45000 345000
Total cost of goods sold 287250 91500 15750 55500 450000
Gross margin 87750 58500 29250 19500 195000
Gross-margin percentage 23.40% 39.00% 65.00% 26.00% 30.23%

Summary of gross-margin percentages:

Joint-Cost Allocation Method Super A Super B C Super D Total
Sales value at splitoff 27.60% 42.50% 58.00% 2.20% 30.23%
Physical measure 20.60% 46.00% 65.00% 26.00% 30.23%
Net realizable value 23.40% 39.00% 65.00% 26.00% 30.23%

2.
Further Processing of A into Super A:
Incremental revenue, $375,000 – $75,000 300000
Incremental costs 240000
Incremental operating income from further processing 60000

Further processing of B into Super B:

Incremental revenue, $150,000 – $62,500 87500
Incremental costs 60000
Incremental operating income from further processing 27500

Further Processing of D into Super D:

Incremental revenue, $75,000 – $67,500 7500
Incremental costs 45000
Incremental operating loss from further processing -37500

Operating income can be increased by $37,500 if Product D is sold at its splitoff point
rather than processing it further into Super D.

Joint Costs Revenues at Splitoff and Separable Costs

A, 275,000 gallons Processing

Revenue = $75,000 $175

Processing B, 100,000 gallons Processing

$105,000 Revenue = $62,500 $105

C, 75,000 gallons Processing

Revenue = $45,000 $210

D, 50,000 gallons Processing

Revenue = $67,500 $45,000

Splitoff Point
1050000

200000

126000

24000

Vet Product Total

5000 125000
24000 150000
29000 275000
500 2500
58 110
200 500
11600 48500

1100000

1375000
80%

Vet Product Total

205000 1375000
164000 1100000
41000 275000
5000 125000
36000 150000

= 994500
$105,000 Joint Costs
31500
26250
18900
28350
105000

$105,000 Joint Costs

57750
21000
15750
10500
105000

le Value at Splitoff Weighting Allocation of $105,000 Joint Costs

135000 0.45 47250
90000 0.30 31500
45000 0.15 15750
30000 0.10 10500
300000 1.00 105000
Processing Crude Oil 150
$175 bbls × $18 / bbl = $2,700

Processing NGL 50
$105 bbls × $15 / bbl = $750

Processing Gas 800 eqvt bbls ×

$210 $1.30 / eqvt bbl = $1,040

Processing
$45,000
 No. 16-29

Joint Costs Separable Costs

Chocolate_x0002_Pow Processing
der Liquor Base $50,100
Cocoa
Beans
Processing

Milk-Chocolate Processing
Liquor Base $60,115

1.
A).
Sales value at splitoff metod:
Chocolate_x0002_Powder/ Liquor Base
Sales value of total production at splitoff,
700 × $20; 700 × $60 14000
Weighting, $14,000; $42,000 ÷ $56,000 0.25
Joint costs allocated, 0.25; 0.75 × $62,000 15500
Production cost per pound
[$15,500 + $50,100] ÷ 9,100; 7.21
[$46,500 + $60,115] ÷ 14,980

B).
Physical-measure method:
Chocolate_x0002_Powder/ Liquor Base
Physical measure of total production
(28,000 ÷2,000) × 50; 50 700
Weighting, 700; 700 ÷1,400 0.50
Joint costs allocated,
0.50; 0.50 × $62,000 31000
Production cost per pound
[$31,000 + $50,100] ÷ 9,100; 8.91
[$31,000 + $60,115] ÷ 14,980

C).
Net realizable value method:
 Chocolate_x0002_Powder
Final sales value of total production,
9,100 × $9; 14,980 × $10 81900
Deduct separable costs 50100
Net realizable value at splitoff point 31800
Weighting, $31,800; $89,685 ÷$121,485 0.2618
Joint costs allocated,
0.2618; 0.7382 × $62,000 16229
Production cost per pound
[$16,232 + $50,100] ÷ 9,100; 7.29
[$45,768 + $60,115] ÷ 14,980

D).
Constant gross-margin percentage NRV method:
Final sales value of total production, (9,100 × $9; 14,980 × $10) 231700
Deduct joint and separable costs, ($62,000 + $50,100 + $60,115) 172215
Gross margin 59485
Gross-margin percentage ($59,485 ÷ $231,700) 25.6733%

Chocolate_x0002_Powder
Final sales value of total production,
9,100 × $9; 14,980 × $10 81900
Deduct gross margin, using overall gross-
margin percentage of sales (25.6733%) 21026
Total production costs 60874
Deduct separable costs 50100
Joint costs allocated 10774
Production cost per pound
[$10,774 + $50,100] ÷ 9,100; 6.69
[$51,226 + $60,115] ÷ 14,980

2.

Chocolate_x0002_Powder
a. Revenues (6,500 × $9; 13,500 × $10) 58500
Cost of goods sold
Joint costs 15500
Separable costs 50100
Production costs 65600
Deduct ending inventory
((9100-6500) × $7.21; (14980-13500) × $7.12) 18746
Cost of goods sold 46854
Gross margin 11646
Gross-margin percentage 19.9%
b. Chocolate_x0002_Powder
Revenues 58500
Cost of goods sold
Joint costs 31000
Separable costs 50100
Production costs 81100
Deduct ending inventory
((9100-6500) × $8,91; (14980-13500) × $6,08) 23166
Cost of goods sold 57934
Gross margin 566
Gross-margin percentage 0.97%

c. Chocolate_x0002_Powder
Revenues 58500
Cost of goods sold
Joint costs 16232
Separable costs 50100
Production costs 66332
Deduct ending inventory
((9100-6500) × $7,29; (14980-13500) × $7,07) 18954
Cost of goods sold 47378
Gross margin 11122
Gross-margin percentage 19.0%

3. Further processing of chocolate-powder liquor base into chocolate powder:

Incremental revenue, $81,900 – $14,000
Incremental costs
Incremental operating income from further processing

Further processing of milk-chocolate liquor base into milk chocolate:

Incremental revenue, $149,800 – $42,000
Incremental costs
Incremental operating income from further processing

Chocolate Factory should continue to process milk-chocolate liquor base into milk chocolate and chocolate-powder
 Chocolate
Powder

Milk
Chocolate

Chocolate_x0002_Powder/ Liquor Base Total

42000 56000
0.75
46500 62000

7.12

Chocolate_x0002_Powder/ Liquor Base Total

700 1400
0.50 115850

31000 62000

6.08
Milk_x0002_Chocolate Total

149800 231700
60115 110215
89685 121485
0.7382

45771 62000

7.07

Milk_x0002_Chocolate Total

149800 231700

38459 59485
111341 172215
60115 110215
51226 62000

7.43

Milk_x0002_Chocolate Total
135000 193500

46500 62000
60115 110215
106615 172215

10538 29284
96077 142931
38923 50569
28.8%
 Milk_x0002_Chocolate Total
135000 193500

31000 62000
60115 110215
91115 172215

8998 23166
82117 140051
52883 53449
39.2%

Milk_x0002_Chocolate Total
135000 193500

45768 62000
60115 110215
105883 172215

10464 29418
95420 142797
39580 50703
29.3%

67900
50100
$ 17,800

107800
60115
$ 47,685

k chocolate and chocolate-powder liquor base into chocolate powder.

 No. 16-30

1.
A).
Sales value at splitoff method

Monthly Unit Output Selling Price Per Unit Sales Value of Total Prodn. at Splitoff
Studs (Building) 82000 6 492000
Decorative Pieces 2000 70 140000
Posts 18000 16 288000
Totals 102000 920000

B).
Physical measure method.
Physical Measure of Total Prodn Weighting Joint Costs Allocated
Studs (Building) 82000 80.39% 82000
Decorative Pieces 2000 1.96% 2000
Posts 18000 17.65% 18000
Totals 102000 100% 102000

C).
Net realizable value method.

Monthly Units of Total Prodn. Fully Processed Selling Price per Unit
Studs (Building) 82000 6
Decorative Pieces 1800 110
Posts 18000 16
Totals

2.
Presented below is an analysis for Doughty Sawmill, Inc., comparing the processing of decorative pieces further ver

Units Dollars
Monthly unit output 2000
Less: Normal further processing shrinkage 200
Units available for sale 1800
Final sales value (1,800 units × $110 per unit) 198000
Less: Sales value at splitoff -140000
Incremental revenue 58000
Less: Further processing costs -110000
Additional contribution from further processing -52000
lue of Total Prodn. at Splitoff Weighting Joint Costs Allocated
492000 53.48% 54547.8260869565
140000 15.22% 15521.7391304348
288000 31.30% 31930.4347826087
920000 100.00% 102000

Joint Costs Allocated

82000
2000
18000
102000

ocessed Selling Price per Unit Fully Processed Selling Price per Unit Weighting Joint Costs Allocated
6 492000 56.68% 578157
110 88000 10.14% 103410
16 288000 33.18% 338433
868000 100.00% 1020000

g of decorative pieces further versus selling the rough-cut product immediately at splitoff: