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  • EXERCICE Cost Accounting 16-16

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    Amanda Veronika
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    Quality Chicken grows and processes chickens into five main parts. In July 2012, the joint cost of production was $50. A shipment of 40 lbs of breasts and 15 lbs of wings was destroyed in a fire. The insurance company will reimburse using a joint-cost allocation method. 1. Using the sales value at split-off point method, the cost of the destroyed shipment is $15.34. Using the physical measure method based on pounds, the cost is $11. 2. Quality Chicken should use the sales value at split-off point method because it generates a higher insurance recovery value.

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    Quality Chicken grows and processes chickens into five main parts. In July 2012, the joint cost of production was $50. A shipment of 40 lbs of breasts and 15 lbs of wings was destroyed in a fire. The insurance company will reimburse using a joint-cost allocation method. 1. Using the sales value at split-off point method, the cost of the destroyed shipment is $15.34. Using the physical measure method based on pounds, the cost is $11. 2. Quality Chicken should use the sales value at split-off point method because it generates a higher insurance recovery value.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    48 views3 pages

    EXERCICE Cost Accounting 16-16

    Uploaded by

    Amanda Veronika
    Quality Chicken grows and processes chickens into five main parts. In July 2012, the joint cost of production was $50. A shipment of 40 lbs of breasts and 15 lbs of wings was destroyed in a fire. The insurance company will reimburse using a joint-cost allocation method. 1. Using the sales value at split-off point method, the cost of the destroyed shipment is $15.34. Using the physical measure method based on pounds, the cost is $11. 2. Quality Chicken should use the sales value at split-off point method because it generates a higher insurance recovery value.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 3

    Exercises 16-16

    Joint-cost allocation, insurance settlement. Quality Chicken grows and processes chickens.
    Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is as follows:

    Joint cost of production in July 2012 was $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 the following:
    a. Sales value at splitoff method
    b. Physical-measure method (pounds of finished product)
    2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.

    Answer

    1. Compute the cost of the special shipment destroyed using

    a. Sales value at the splitoff method

    product produced Pounds of Product SP per Pound Sales Value at Splitoff Pt.
    Breasts 100 $ 0.55 $55.00
    Wings 20 $ 0.20 4
    Thigs 40 $ 0.35 14
    Bones 80 $ 0.10 8
    Feathers 10 $ 0.05 0.5
    Total 250 81.5

    Cost of destroyed Product


    product produced Join Cost per Pound Pounds Lost Insurance Claim
    Breasts $ 0.3374 40 $ 13.50
    Wings $ 0.1227 15 $ 1.84
    Total $ 15.34

    b. Physical measures method


    product produced Pounds of Product Join Cost Allocated Join Cost per #
    Breasts 100 $ 20.00 $ 0.2000
    Wings 20 $ 4.00 $ 0.2000
    Thigs 40 $ 8.00 $ 0.2000
    Bones 80 $ 16.00 $ 0.2000
    Feathers 10 $ 2.00 $ 0.2000
    Total 250 $ 50.00

    Cost of destroyed Product


    product produced Join Cost per Pound Pounds Lost Insurance Claim
    Breasts $ 0.2000 40 $ 8.00
    Wings $ 0.2000 15 $ 3.00
    Total $ 11.00

    2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.
    Sales value at the splitoff method generates the higherinsurance recovery value

    AMANDA VERONIKA
    19102077
    Join Cost Allocated Join Cost Per Pound
    $ 33.74 $ 0.3374
    $ 2.45 $ 0.1227
    $ 8.59 $ 0.2147
    $ 4.91 $ 0.6130
    $ 0.31 $ 0.0307
    $ 50.00

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