Problem 1 Oxnard Corporation processes two products from a joint process. Each product may be sold at the splitoff point or procesessed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. The following information was available for the month of September: Direct materials processed: 3,500 gallons (3,300 gallons of good product) Production: Product A Product B 1,500 gallons 1,800 gallons Sales: Product A Product B 1,500 gallons at $3.00 per gallon 1,800 gallons at $2.50 per gallon The cost of purchasing 3,500 gallons of direct materials and processing it up to the splitoff point to yield a total of 3,300 gallons of good products was $7,000. Product A may be processed further to yield 1,200 gallons (the remainder is shrinkage) of a special product: Product Al; for an additional processing cost of $10,000 per usable gallon. Product Al can be sold for $15 per gallon. Product B may be processed further to yield 1,500 gallons (the remainder is shrinkage) of a special product: Product Bl; for an additional processing cost of $8,000 per usable gallon. Product B1 can be sold for $12 per gallon. There are no beginning and ending inventory balances. Required: Calculate all ratios and percentages to 4 decimal places, for example, 33.3333%, and round all dollar amounts to the nearest whole dollar. 3. Which product, if any, do you think should have been processed beyond the split-off point Why? 4. "What's the big concern about learning four different methods of cost allocation for joint products? The total cost does not change, and the real question that needs answering is whether to further process joint products or sell right away. Besides, the firm uses Just in time inventory, so there aren't any ending inventories to cost." Required: Comment on these ideas. Problem 1 Oxnard Corporation processes two products from a joint process. Each product may be sold at the splitoff point or procesessed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. The following information was available for the month of September: Direct materials processed: 3,500 gallons (3,300 gallons of good product) Production: Product A Product B 1,500 gallons 1,800 gallons Sales: Product A Product B 1,500 gallons at $3.00 per gallon 1,800 gallons at $2.50 per gallon The cost of purchasing 3,500 gallons of direct materials and processing it up to the splitoff point to yield a total of 3,300 gallons of good products was $7,000. Product A may be processed further to yield 1,200 gallons (the remainder is shrinkage) of a special product: Product Al; for an additional processing cost of $10,000 per usable gallon. Product Al can be sold for $15 per gallon. Product B may be processed further to yield 1,500 gallons (the remainder is shrinkage) of a special product: Product Bl; for an additional processing cost of $8,000 per usable gallon. Product B1 can be sold for $12 per gallon. There are no beginning and ending inventory balances. Required: Calculate all ratios and percentages to 4 decimal places, for example, 33.3333%, and round all dollar amounts to the nearest whole dollar. 3. Which product, if any, do you think should have been processed beyond the split-off point Why? 4. "What's the big concern about learning four different methods of cost allocation for joint products? The total cost does not change, and the real question that needs answering is whether to further process joint products or sell right away. Besides, the firm uses Just in time inventory, so there aren't any ending inventories to cost." Required: Comment on these ideas
