Question
YELLOW CORPORATION has a single manufacturing process, from which four items emerge: BLUE, WHITE, RED and POOPIE. The company accounts for by-products at time of
YELLOW CORPORATION has a single manufacturing process, from which four items emerge: BLUE, WHITE, RED and POOPIE. The company accounts for by-products at time of production by inventorying their sales value. The following information is available regarding the production from last month:
Per unit
Additional
Per unit
Production
Sales Value
processing Sales value after
(pounds)
at split-off
per pound
further processing
BLUE
2,000
$0.50
$1.60
$21.60
WHITE
7,000
-
$2.00
$17.00
RED
1,000
$0.60
$4.50
$59.50
POOPIE
10,000
$0.01
-
-
BLUE, RED AND POOPIE are all salable at the split-off point. WHITE cannot be sold at split-off, and the company is unable to estimate a value at that point. Joint production costs for the month totaled $51,000
SPACE PROVIDED HERE TO DRAW PICTURE
7. Using the physical units basis of allocation, the amount of joint cost allocated to RED is: $____________
Page 3
8. Using the sales value at split-off method of allocation, the amount of joint cost allocated to BLUE is:
$___________
9. Using the net-realizable-value method, joint cost allocated to WHITE will be:
$___________
10. Using the NRV method to allocate the joint costs, what is the journal entry to represent the allocation of the joint costs to the main products?
DEBIT CREDIT
11. CONSIDER THE FOLLOWING STATEMENT:
"In order to determine whether a joint product should be process further, joint costs should be allocated to the products"
Agree or disagree and WHY?
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