Soy Products

(Upper KKSP)

buys soybeans and processes them into other soy products. Each ton of soybeans that

Upper KKSP

purchases for

$ 250$250

can be converted for an additional

$ 210$210

into

700700

lbs of soy meal and

100100

gallons of soy oil. A pound of soy meal can be sold at splitoff for

$ 1.04$1.04

and soy oil can be sold in bulk for

$ 4$4

per gallon.

Upper KKSP

can process the

700700

pounds of soy meal into

800800

pounds of soy cookies at an additional cost of

$ 330$330.

Each pound of soy cookies can be sold for

$ 2.04$2.04

per pound. The

100100

gallons of soy oil can be packaged at a cost of

$ 200$200

and made into

400400

quarts of Soyola. Each quart of Soyola can be sold for

$ 1.35$1.35.

Read the requirements

1.	Allocate the joint cost to the cookies and the Soyola using the following:
	a.	Sales value at splitoff method
	b.	NRV method
2.	Should Upper KKSP have processed each of the products further? What effect does the allocation method have on this decision?

Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method.

a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.)

	Cookies/	Soyola/
	Soy Meal	Soy Oil	Total
Sales value of total production at splitoff	$728	$400	$1,128
Weighting	0.645	0.355	1.000
Joint costs allocated	$297	$163	$460

b. Now allocate the joint cost to the cookies and the Soyola using the NRV method. (Round the weights to three decimal places and joint costs to the nearest dollar.)

	Cookies	Soyola	Total
Final sales value of total production	$1,632	$540	$2,172
Deduct separable costs	330	200	530
Net realizable value	$1,302	$340	$1,642
Weighting	0.793	0.207	1.000
Joint costs allocated	$365	$95	$460

Requirement 2. Should

Upper KKSP

have processed each of the products further? What effect does the allocation method have on this decision?Begin by calculating the profit or loss that would occur if

Upper KKSP

processed the products further. (Use parentheses or a minus sign for losses.)

	Cookies/	Soyola/
	Soy Meal	Soy Oil
Sell at splitoff : Revenue
Process further : NRV
Profit (Loss) from processing further