Joint cost allocation
Analyze Wiliam's Ball Jersey Shop William's Ball & Jersey Shop is a small athletic products company currently trying to determine cost allocations. Accurate costing numbers are important but not crucial; no employee bonuses depend on them, and the company wants to keep the cost allocation process simple and cost-effective The company produces and sells football, basketballs, baseballs, and jerseys for each of those sports. The jerseys of each sport go through a joint production process before they are dyed, embroidered, and printed with the appropriate colors and logos for whatever team they are to represent. William Lind, the owner, believes an adjustment might need to be made to the company's current physical units method of joint cost allocation. Presently, youth- and adult-size jerseys go through the same joint production process, but the adult-size jerseys require more material, cutting, and sewing than youth size jerseys William is also considering the addition of a toddler-size jersey to his baseball Jersey Joint product line. The market value at the split-off point of the toddler size jersey is expected to be barely less than its share of the joint production cost (based on the company's current joint cost a location method), but it will only incur as per jersey additional production process cost a. Identify the cost allocation method that suits the given situation for the support department cost. a. Direct method b. Reciprocal services method. c. Sequential method d. None of the above b. Identify the joint cost allocation method that could improve the joint cost allocation of the company a. Sales value method. b. Net realizable value method. c. Weighted average method d. None of the above. eBook Calculator c. Identify additional information that the company should have before starting the production of toddler-size jerseys. a. The market demand for the toddler-size jerseys b. The market value of the toddler-size jersey at the split-off point. C. The market price of the toddler-size jersey and the share of toddler-size Jersey in the joint cost. d. All the above. d. Identify whether the toddler-size jerseys are profitable if the market value at the split-off point is $10 and the market price after further process is $17.99. a. The toddler-size jersey will be profitable as the net realizable value is $4.99 ($17.99 - $10-$3). The share of the toddler-size jersey in joint cost allocation is less. b. The toddler-size jerseys are not profitable as the joint cost allocation share is decreasing c. The toddler-size jerseys are profitable provided the market demand is high d. None of the above. e. Suppose William provides the following information: Production Production Department 1 Department 2 Support Department 1 cost driver Support Department 2 cost driver 2,280 1,720 What percentage of each support department's cost should be allocated to each production department using the direct method? Production Production Department 1 Department 2 Support Department 1 cost allocation Support Department 2 cost allocation Previous
