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Exercise 1: Sales Value at Split-Off Method

This document contains examples of different cost allocation methods: the split-off method, physical measures method, net realizable value (NRV) method, constant gross margin percentage method, and sales-to-production method. For each method, data on production quantities and values is provided to demonstrate how joint costs would be allocated between different products. Formulas or calculations are not shown, only the input and output values for each example problem.

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Topics covered

  • Resource Allocation,
  • Original Product,
  • Financial Analysis,
  • Cost Recovery,
  • Financial Reporting,
  • Sales Strategy,
  • Mild Product,
  • Cost Efficiency,
  • Product Cost,
  • Sales Value Method
160 views8 pages

Exercise 1: Sales Value at Split-Off Method

This document contains examples of different cost allocation methods: the split-off method, physical measures method, net realizable value (NRV) method, constant gross margin percentage method, and sales-to-production method. For each method, data on production quantities and values is provided to demonstrate how joint costs would be allocated between different products. Formulas or calculations are not shown, only the input and output values for each example problem.

Uploaded by

Franch
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Topics covered

  • Resource Allocation,
  • Original Product,
  • Financial Analysis,
  • Cost Recovery,
  • Financial Reporting,
  • Sales Strategy,
  • Mild Product,
  • Cost Efficiency,
  • Product Cost,
  • Sales Value Method

EXERCISE 1: SALES VALUE @ SPLIT-OFF METHOD

MV @ Split-off Point Joint Costs Allocated


Electric Percolators 300,000.00 150,000.00
Stovetop Percolators 150,000.00 75,000.00
Replacement Parts 50,000.00 25,000.00
500,000.00 250,000.00 Given
EXERCISE 2: PHYSICAL MEASURES METHOD
NOTE: ALWAYS USE THE PRODUCED, IF NON, USE THE BEGINNING AND SOLD, IF NO SOLD=STILL ALLOC

Produced Joint Cost Allocation


Mild 100,000.00 370000
Original 250,000.00 925000
Extra Spicy 150,000.00 555000
500,000.00 1,850,000.00
SOLD=STILL ALLOCATE
EXERCISE 3: NRV METHOD

Produced NRV/can NRV Joint Cost Allocation


Mild 800,000.00 91.50 73,200,000.00 347766
Original 2,000,000.00 97.50 195,000,000.00 926425
Extra Spicy 1,200,000.00 101.00 121,200,000.00 575809
4,000,000.00 389,400,000.00 1,850,000.00
1,850,000.00
EXERCISE 4: CONSTANT GROSS MARGIN PERCENTAGE METHOD

A B C
Sales 1,000,000.00 2,000,000.00 700,000.00
Less: Joint Cost 50,000.00 850,000.00 350,000.00
Less: FPC/SC 750,000.00 750,000.00 210,000.00
GM/GP 200,000.00 400,000.00 140,000.00
TOTAL PRODUCT COST
3,700,000.00
1,250,000.00
TOTAL PRODUCT COST
1,710,000.00
740,000.00 20.00% GP%
EXERCISE 5: SALES-TO-PRODUCTION METHOD

SEE HANDOUTS SOLUTION IS ALREADY ENCODED THERE :)

0.013332
0.925833
0.179676

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