Question
There is no missing info. This is everything from the practice set. If you don't know the answer, please just skip. Don't flag :( In
There is no missing info. This is everything from the practice set. If you don't know the answer, please just skip. Don't flag :(
In one of its operations, Chemical Company uses Alpha as a primary input and produces 2 unfinished main products, Beta and Gamma, and a by-product Sigma. Unfinished Beta can be sold for P0.34/lb or further refined in a separate process to yield finished Beta, which is saleable at P1.60/lb. Unfinished Gamma can be sold at a price of P0.26/lb or receive additional work in a separate process yielding finished Gamma, which has a sales price of P1.80/lb. Sigma can be sold at a price of P0.50/lb after further processing and other costs of P0.10/lb. Approximately 450,000 lbs of Alpha are processed each accounting period, with Beta and Gamma being produced in the following proportions: Beta - 250,000 lbs; Gamma - 150,000 lbs; Sigma - 50,000 lbs. At a normal level of processing, the following manufacturing costs are typical when both unfinished Beta and Gamma are refined beyond the split-off point. Separable Costs Joint Costs Beta Gamma Materials P 60,000 P 64,700 P 14,600 Labor 25,000 139,300 146,000 Overhead 15,000 42,000 29,400 P100,000 P246,000 P190,000 ALLOCATE THE JOINT COSTS and DETERMINE THE VALUE ASSIGNED TO THE BY-PRODUCT: 1. Assume that Chemical Company uses pounds of output as the basis for allocating joint costs to main products, and by-products are recognized at NRV at point of production. 2. Assume that Company uses pounds of output as the basis for allocating joint costs to main products and that Beta and Gamma are assigned weights of 8 and 20 because of the relative difficulty of handling each product, and by-products are recognized at NRV less a normal profit margin of 10% at point of production. 3. Assume that Chemical Company sells both Beta and Gamma as unfinished products and uses their market value at split-off point as the basis for allocating joint costs to main products, and by-products are recognized at further processing. 4. Assume that Chemical Company sells Beta at split-off and Gamma after additional processing and uses their approximate NRV at split-off point as the basis for allocating joint costs to main products and by-products. 5. Assume that Chemical Company sells Beta and Gamma after additional processing, and the constant gross-margin percentage NRV method is used as the basis for allocating joint costs to main products, and by-products are recognized at point of sale.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started