Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of

Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of processing in this department, three products appear. Product A is sold at the split-off point with no further processing. Products B and C require further processing before they are sold. Product B is processed in Department Y, and product C is processed in Department Z. The company uses the estimated net realizable value method of allocating joint production costs. Following is a summary of costs and other data for the quarter ended June 30.

No inventories were on hand at the beginning of the quarter. No raw material was on hand at June 30. All units on hand at the end of the quarter were fully complete as to processing.

Products A B C
Pounds sold 21,000 63,000 71,000
Pounds on hand at June 30 45,000 0 44,000
Sales revenues $ 52,500 $ 302,400 $ 372,750

Departments X Y Z
Raw material cost $ 163,000 $ 0 $ 0
Direct labor cost 71,000 93,000 282,000
Manufacturing overhead 28,000 31,900 104,500

Required:

a. Determine the following amounts for each product: (Do not round intermediate calculations.)

(1) Estimated net realizable value used for allocating joint costs.

(2) Joint costs allocated to each of the three products.

(3) Cost of goods sold.

(4) Finished goods inventory costs, June 30.

b. Assume that the entire output of product A could be processed further at an additional cost of $5.60 per pound and then sold for $12.20 per pound. Compute the incremental income from further processing A.

c. Considering the results of part b, should the company process product A further?

Yes
No

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Customer Satisfaction Marketing Added Value

Authors: Cindy E. Cosmas

1st Edition

089413373X, 978-0894133732

More Books

Students also viewed these Accounting questions