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5. Dance in the Dark, Inc., among other things, manufactures dolls. The monthly production from an initial joint process is as follows: Costs of initial
5. Dance in the Dark, Inc., among other things, manufactures dolls. The monthly production from an initial joint process is as follows: Costs of initial processing Direct Materials (plastic) $ 180,000 Direct Labor (machinists) 195,000. Variable Overhead (utilities, deprec., etc..) 125,000 At which point, 20,000 units of product (the basic doll) are ready for further processing. Since the units of production method is used to apply costs of the joint process to the units produced, the units go forward with a $25 cost so far. These units are further processed into three main models, Marilyn (8000 units), Judy (7000 units) and Sylvia (the remaining 5000) with these unit sales numbers being maximums for demand of each model. Assume these product mix demand limits make the separate doll models into three separate product lines. The further processing costs are added to the $ 25 to figure out the total per unit production cost. Further costs are as follows: Doll product lines (per unit costs) Marilyn Judy Sylvia Direct Materials (paint, clothing, etc..) $ 32 $ 24 $ 11 Direct Labor (stitching, coloring, etc.,) Variable Manuf. Overhead (util., depr..) At which point, the dolls are done and ready for sale. The Marilyn models sell for $98, the Judy for $ 76, and the Sylvia for $ 50. As mentioned above, the joint costs are allocated using a physical units' computation, total processing costs of $ 500,000 divided by 20,000 basic dolls, for $ 25 each. This is because there is no sales value to the dolls at split off, the added processing costs are needed to make the dolls saleable. If the company were to allocate joint costs to the separate lines based on net realizable value methods, what joint costs would be allocated to each doll line, and what would be the per unit total costs for all three models? If the company were to use constant gross margin methods, how would the joint costs be allocated to the different doll lines, and what would be the per unit costs? Show appropriate calculations to justify your response. 18 16 9 8 6 5
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