Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Klippan Products obtains the intermediate products A and B from a joint process. During April, the joint processing costs were $365,000 to obtain 200,000 feet

Klippan Products obtains the intermediate products A and B from a joint process. During April, the joint processing costs were $365,000 to obtain 200,000 feet of product A and 600,000 feet of B. These intermediate products were further processed without any shrinkage to the final products AA and BB, respectively. The final selling prices were $0,90 and $1.10 per foot and the separable costs of further processing were $50,000 and $40,000 respectively. What are the joint costs allocated to AA and BB using the constant gross margin approach to cost allocation? Please carry at least three decimal places in any rates you may use. Otherwise rounding error can be substantial. While Klippan did not sell the intermediate products, they could have been sold for $0.80 and $1.00 a foot, respectively. Could Klippan have increased its operating income by a change in its decision to further process its intermediate products? If so, which products should they have sold at the intermediate and final stages?

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

Managerial Accounting for Managers

Authors: Eric Noreen, Peter Brewer, Ray Garrison

2nd edition

978-0077403485, 77403487, 73527130, 978-0073527130

More Books

Students also viewed these Accounting questions

Question

What kind of financial pressures can an LBO cause?

Answered: 1 week ago