Question
In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative
In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses.
Joint cost is allocated on the basis of relative sales value at split-off. The company can choose to process each of the products further rather than sell the fabric at split-off. Information related to these products follows.
| Dresses | Jackets | Blouses | Total | |
|---|---|---|---|---|
| Number of units produced | 16,000 | 25,600 | 9,600 | 51,200 |
| Joint cost allocated | ? | $220,800 | ? | $576,000 |
| Sales values at split-off point | ? | $368,000 | $128,000 | $960,000 |
| Additional costs of processing further | $41,600 | $32,000 | $124,800 | $198,400 |
| Sales values after all processing | $480,000 | $428,800 | $336,000 | $1,244,800 |
a. What amount of joint cost should be allocated to dresses and blouses?
| Dresses | Blouses | |
|---|---|---|
| Allocated joint costs |
b. What is the sales value at the split-off point for dresses? c. Should any of the products be processed beyond the split-off point? Show computations.
| Dresses | Jackets | Blouses | |
|---|---|---|---|
| Net benefit (cost) of further processing |
| Process Further? | |
|---|---|
| dresses |
| jackets | |
| blouses |
d. If 19,200 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale?
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Principles Of Auditing And Other Assurance Services
Authors: Ray Whittington, Kurt Pany
17th Edition
0073379654, 9780073379654
