Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately identifiable

It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately identifiable at a single split-off point. Every 900 pounds of cocoa beans yields 30 gallons of chocolate-powder liquor base and 120 gallons of milk-chocolate liquor base. The chocolate-powder liquor base is further processed into a chocolate powder. Every 30 gallons of chocolate-powder liquor base yield 670 pounds of chocolate powder. The milk-chocolate liquor base is further processed into milk chocolate. Every 120 gallons of milk-chocolate liquor base yield 1,090 pounds of milk chocolate.

Cocoa beans processed, 19,800 pounds times

Costs of processing cocoa beans to split off point (including the purchase of beans), $ 68,000

Production

Sales

Selling Price

Separable Processing Costs

Chocolate powder

14,740

pounds

6,700

pounds

$12

per pound

$8,975

Milk chocolate

23,980

pounds

14,500

pounds

$10

per pound

$91,095

Creme de Cacao Edibles Factory fully processes both of its intermediate products into chocolate powder or milk chocolate. There is an active market for these intermediate products. In August 2017, Creme de Cacao Edibles Factory could have sold thechocolate-powder liquor base for $ 24 a gallon and themilk-chocolate liquor base for $ 9 a gallon.

Requirement 1. Calculate how the joint costs of

$ 68000 would be allocated between chocolate powder and milk chocolate under the different methods.

a. Sales value at splitoff method. Begin by entering the appropriate amounts to allocate the joint costs. (Round the weighting amounts to four decimal places.)

Sales value of total

Joint costs

production at splitoff

Weighting

allocated

Chocolate powder

Milk chocolate

Total

b. Allocate the joint costs using the physical measure method. Begin by entering the appropriate amounts to allocate the joint costs. (Round the weighting amounts to four decimal places.)

Physical measure of

Joint costs

total production

Weighting

allocated

Chocolate powder

Milk chocolate

Total

c. Allocate the joint costs using the net realizable value method. Begin by entering the appropriate amounts to allocate the joint costs. (Round the weighting amounts to four decimal places. Round the joint costs allocated to the nearest whole dollar.)

Net realizable

Joint costs

value

Weighting

allocated

Chocolate powder

Milk chocolate

Total

d. Constant gross-margin percentage NRV method. Begin by entering the appropriate amounts to allocate the joint costs.(Round the percentage to four decimal places, X.XXXX%.)

The overall gross-margin percentage for all joint products together is

%.

Now determine the formula to compute the joint costs allocated, then enter the appropriate amounts. (Round your answers to the nearest whole dollar.)

Total production costs

-

Separable processing costs

=

Joint costs allocated

Chocolate powder

-

=

Milk chocolate

-

=

Requirement 2. What are the gross-margin percentages of chocolate powder and milk chocolate under each of the methods in requirement 1? (Use parentheses or a minus sign when entering negative amounts. Round the percentages to the nearest hundredthpercent, X.XX%.)

Chocolate powder

Milk chocolate

a. Sales value at splitoff

%

%

b. Physical-measure

%

%

c. NRV

%

%

d. Constant gross-margin percentage NRV

%

%

Requirement 3. Could

Cocoa Nibs

Edibles Factory has increased its operating income through a change in its decision to fully process both of its intermediateproducts. Show your computations. (Use parentheses or a minus sign when entering decreasing amounts.)

Begin by determining the formula to compute theincrease/(decrease) in operating income, then enter the appropriate amounts.

Increase/(decrease)

Incremental revenue

-

Separable processing costs

=

in operating income

Chocolate powder

-

=

Milk chocolate

-

=

Cocoa Nibs

Edibles Factory could increase operating income if the chocolate-powder liquor base is

further processed into chocolate powder

and if the milk-chocolate liquor base is

further processed into milk chocolate.

Step by Step Solution

3.36 Rating (159 Votes )

There are 3 Steps involved in it

Step: 1

Requirement 1 a Sales value at splitoff method Sales value of total production at splitoff Chocolatepowder liquor base 19800 lbs 900 lbs 30 gallons 24gallon 316800 Milkchocolate liquor base 19800 lbs ... 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

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan

15th edition

978-0133428858, 133428850, 133428702, 978-0133428704

More Books

Students also viewed these Accounting questions

Question

How does harmonization differ from convergence?

Answered: 1 week ago