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NW Flour Company buys 1 input of standard flour and refines it using a special sifting process to 3 cups of baking flour and 9
NW Flour Company buys 1 input of standard flour and refines it using a special sifting process to 3 cups of baking flour and 9 cups of bread flour. In May 2017, NW bought 11,200 inputs of flour for $88,500. NW spent another $47,700 on the special sifting process. The baking flour can be sold for $3.65 per cup and the bread flour for $4.95 per cup 1 NW puts the baking flour through a second process so it is super fine. This costs an additional S1 per cup of baking flour and the process yields cup of super-fine baking flour for every one cup of baking flour used. The super-fine baking flour sells for $9.90 per cup. Required Requirement 1a. Allocate the S136,200 joint cost to the super-fine baking flour and the bread flour using the physical-measure method (using cups) of joint-cost allocation. (Round the weights to four decimal places. Round the joint costs allocated to the nearest whole dollar.) Baking Flour Bread Flour Total Physical measure of total production (in cups) Weighting Joint costs allocated Required - X 1. Allocate the $136,200 joint cost to the super-fine baking flour and the bread flour using the following: a. Physical-measure method (using cups) of joint-cost allocation b. Sales value at splitoff method of joint-cost allocation C. NRV method of joint-cost allocation d. Constant gross-margin percentage NRV method of joint-cost allocation 2. Each of these measures has advantages and disadvantages; what are they? 3. Some claim that the sales value at splitoff method is the best method to use. Discuss the logic behind this claim
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