Chapter 9
Joint Product and By-Product Costing
MULTIPLE-CHOICE QUESTIONS
9.16
9.17
9.18
9.19
9.20
Ans: B
Ans: B
Ans: D
Ans: C
Ans: A
EXERCISES
9.23
A.
Chocolate Males
Yellow Males
Yellow Females
Total allocated
$111.11
266.67
322.22
$700.00
Chocolate Male
Yellow Male
Yellow Female
$ 44.44 per puppy
106.67 per puppy
128.89 per puppy
B.
9.24
Sold at split-off: = $800
Processed further: = $700
9.25
A. Allocated lease cost = $ 100,000
B. Additional contribution for first class = $1,275
9.26
A.
(1) Sales value at split-off point
Allocation
Product
of $100,000
Soap grade
$ 25,000
Cooking grade
15,000
Light moisturizer
25,000
Heavy moisturizer
35,000
9-2
Cost Management
(2) Physical volume
Soap grade
Cooking grade
Light moisturizer
Heavy moisturizer
Allocation
of $100,000
$ 20,000
60,000
10,000
10,000
(3) Estimated Net Realizable Value
Allocation
Product
of $100,000
Fine Soap
$ 50,000
Superior Cooking Oil
10,000
Light moisturizer
25,000
Premium Moisturizer
15,000
(4) Constant Gross Margin Method
Product
Fine Soap
Superior Cooking Oil
Light Moisturizer
Premium Moisturizer
Allocation
of $100,000
$ 47,368
2,456
41,228
8,948
B.
Operating income can be increased by $50,000
9.27
A.
1. Sales value at split-off point method
Allocation
of $15,000
Premium
$ 4,350
Regular
10,650
2. Physical output method
Premium
Regular
Allocation
of $15,000
$ 3,000
12,000
3. Net realizable value method
Premium
Regular
Allocation
of $15,000
$ 5,700
9,300
B. Extra contribution from processing further
$ 2
Chapter 9: Joint Product and By-Product Costing
9.28
A. The inventory cost per litre of residual fuel oil is $0.3529
B. The cost per litre for residual fuel oil is $0.60
C. The minimum acceptable price for Special Fuel Oil is $1.90 per litre.
9.29
A. Gross Margin
$279,000
B. Product cost per board foot ($590,000/300,000 bd ft)
Gross Margin
$279,000
$1.966667
9.30
A. Physical output method:
For Premium: $ 3,000
For regular: $ 7,000
B. NRV method
Allocated to premium $ 4,324
Allocated to regular $ 5,676
C. Constant Gross Margin NRV Method
Premium $ 4,292
Regular $ 5,708
D. Increase in contribution per litre if process further
$ 1
9.31 Sales Value at Split-off
Medium $ 35,000
Mild $ 40,000
9.32
A. Gross margin = $ 51,000
B. Contribution from processing further = $ 3,000
9.33
A. Gross margin $27,000
B. Gross margin $27,200
C. Inventories if by-product value is recognized at the time of production:
Smoothies = $ 1,000
Compost = $ 500
Ending Inventories if by-product value is recognized at the time of sale:
Smoothies = $ 1,200
Compost = $ 0
9-3
9-4
Cost Management
PROBLEMS
9.35
A. Gross profit Product 1 ($20,000); Product 2 ($18,572)
B. Gross margin Product 1 ($30,000); Product 2 ($30,000)
C. Product 1 should be sold “as is” after its joint production with Product 2.
9.36
A. Total joint costs $6,500
B. SLZ-241 $800
QY-58 $100
C. Cost per Unit
SLX-241 $6.70 per litre
QY-58 $4.72 per kg
9.37
A. 94,500 kg for slicing,
75,600 for crushing,
65,500 for juicing
27,000 for feed.
B.
Product
Slices
Crushed
Juice
NRV
$ 52,000
31,000
17,000
Product
Slices
Crushed
Juice
Allocation
$30,160
17,980
9,860
C.
D. Gross margin
Slices = $ 21,840
Crushed = $ 13,020
Juice = $ 7,140
F.
Slices
Crushed
Juice
Total
Additional Cost
$1,820
1,085
595
$3,500
Chapter 9: Joint Product and By-Product Costing
9.39
A. Relaxation
Energizer
Harmony
$ 1,000
4,000
(3,000)
B. Sales
Processing
Joint costs
Income
$ 153,000
28,000
90,000
$35,000
C. Relaxation
Energizer
Harmony
Total
$ 5,625
22,500
61,875
$90,000
D. Relaxation
Energizer
Harmony
Total
$ 8,823
42,353
38,824
$90,000
E. Physical Output method:
Gross margins if sold at split-off point
Relaxation
$ 375
Energizer
25,500
Harmony
4,125
Gross margins if processed further
Relaxation
$ 1,375
Energizer
29,500
Harmony
1,125
NRV method:
Gross margins if sold at split-off point
Relaxation
$ 960
Energizer
10,560
Harmony
18,480
9-5
9-6
Cost Management
Gross margins if processed further
Relaxation
$ 1,960
Energizer
14,560
Harmony
15,480
Final sales value method:
Gross margins if sold at split-off point
Relaxation
$ (2,823)
Energizer
5,647
Harmony
27,176
Gross margins if processed further
Relaxation
$ (1,823)
Energizer
9,647
Harmony
24,176
9.39
A. Total allocated cost of Premium = $ 32,000
B. Variable cost/bottle of Premium = $ 2.83
C. Profit would decline FROM 437,000 TO $58,000
9.40
A. $20,000
B. Product A $18,750; Product B $1,250
C. Gross Margin $4,000
9.41 Unit Costs
Product X = $ 7.47
Product Y = $ 10.29
MINI-CASES
9.42
A. Pretax Income
Deluxe = $ 229
Superior = $ 114
Good = $ 57
Company Wide = $ 400
C. For Deluxe, selling at the split-off point
For Superior, process further
For Good, process further
Chapter 9: Joint Product and By-Product Costing
E. Pretax Income
Deluxe = $ 300
Superior = $ 188
Good = $ 112
Company Wide = $ 600
9.43
A. Income Per Lot
Chemicals = $ 270
Cosmetics = $ 230
9-7