Question 1

Sales value and physical value allocation

To-Go produces milk and sour cream from a joint process. During June, the company
produced 240,000 quarts of milk and 190,000 pints of sour cream (there are two pints in a
quart). Sales value at split-off point was $377,400 for the milk and $177,600 for the sour
cream. The milk was assigned $125,800 of the joint cost.
Note: Round proportions to the nearest whole percentage and dollar amounts to the
nearest whole dollar.

a. Using the sales value at split-off approach, determine the total joint cost for June.
$185,000

b. Assume, instead, that the joint cost was allocated based on the number of quarts
produced. What was the total joint cost incurred in June? $174,722

Question 2

Physical and sales value allocations

FINS produces three products from its fish farm: fish, fish oil, and fish meal. During July,
FINS produced the following average quantities of each product from each pound (16
ounces) of fish processed:

Obtained

from Each

Product Pound of Fish

Fish 8 ounces

Fish oil 4 ounces

Fish meal 2 ounces

Total 14 ounces

Of each pound of fish processed, two ounces are waste (assume 12.5% for calculations).
In July, FINS processed 37.5 tons of fish (1 ton equals 2,000 pounds). Joint cost amounted
to $142,800. On average, each pound of product has the following selling prices: fish,
$4.50; fish oil, $6.50; and fish meal, $2.

a. Allocate the joint cost using weight as the basis.

Note: Round proportions to the nearest whole percentage and dollar amounts to the
nearest whole dollar.

Fish
81,396
Fish Oil
41,412
Fish Meal
19,992
Total
142,800
b. Allocate the joint cost using sales value as the basis.
Note: Round proportions to the nearest whole percentage and dollar amounts to the
nearest whole dollar.

Fish
78,540
Fish Oil
55,692
Fish Meal
8,568
Total
142,800

Question 3

Physical and sales value allocations and sell or process further

Indianola Beef buys sides of beef to convert into three products: steaks, roasts, and ground
beef. In April, Indianola bought multiple sides of beef for $20,000 that were converted into
the following products at a cost of $6,400 :

Product # of Pounds Sales Value at Split-Off

Steaks 3,312 $4.25 per pound

Roasts 6,210 $3.80 per pound

Ground beef 4,278 $0.90 per pound

The remaining 1,200 pounds were lost as waste.

a. Allocate the joint cost to the three products using the physical units method.
Note: Round proportions to the nearest tenth of a percentage (i.e. round 13.45% to 13.5%)
and dollar amounts to the nearest whole dollar.

Allocated Joint Cost

Steaks
6,336
Roasts
11,880
Ground beef
8,184
Total
26,400

What problem do you find with this method?

The problem with this method is that the joint cost assigned to each product is
approximately $1.91

per pound which makes every pound of ground beef sold appear to lose $1.01

b. Allocate the joint cost to the three products using the sales value at split-off method.
Note: Round proportions to the nearest tenth of a percentage (i.e. round 13.45% to 13.5%)
and dollar amounts to the nearest whole dollar.

Allocated Joint Cost

Steaks
8,976
Roasts
15,048
Ground beef
2,376
Total
26,400

Does this allocation eliminate the problem identified in (a)?

The problem mentioned in (a) is corrected with this method because the joint cost
assigned to each pound of ground beef sold is now only $0.56

c. Assume that the ground beef could be processed into sausage that could be sold for
$2.10 per pound to a distributor that wants a special label costing $0.15 per pound
attached to the sausage. If Indianola Beef uses the sales value at split-off method to
allocate joint cost, what is the maximum separate cost of processing that the company
could incur to still appear to earn $0.40 per pound upon the sale? $0.99per pound

Question 4

Allocating joint cost

Keiffer Production manufactures three joint products in a single process. The following
information is available for August:

Sales Value

at Split-Off Cost after Final Selling

Product Gallons per Gallon Split-Off Price

JP-4539 4,500 $14.00 $4.00 $24.00

JP-4587 18,000 25.00 5.00 35.00

JP-4591 13,500 18.00 2.00 22.00

Allocate the joint cost of $558,000 to the production based on the following:

a. number of gallons.

JP-4539
69,750
JP-4587
279,000
JP-4591
209,250
Total
558,000

b. sales value at split-off.

JP-4539
44,640
JP-4587
334,800
JP-4539
44,640
JP-4591
178,560
Total
558,000

c. approximated net realizable values at split-off.

JP-4539
55,800
JP-4587
334,800
JP-4591
167,400
Total
558,000

Question 5

By-product and cost allocation

Dover Studios shot hundreds of hours of footage that cost $20,000,000. From this footage,
the company produced two movies: Star World and Star World: The Sequel. The sequel
used better sound effects than the original, was significantly more expensive to produce,
and was much better received at the box office.
Dover Studios also generated revenue from admissions paid by numerous movie fans who
wanted to tour the movie production set. The company accounted for this revenue as a by-
product and used it to reduce joint cost before making allocations to the two feature-length
movies.
The following information pertains to the two movies:

Products Total Receipts Separate Costs

Star World $10,000,000 $6,800,000

Star World: The Sequel 58,000,000 41,200,000

Studio tours 800,000 480,000

a. If joint cost is allocated based on net realizable value, how much of the joint cost is
allocated to each movie?
Star World
3,148,800
Star World: The Sequel
16,531,200
Total
19,680,000

b. Based on your allocations in (a), how much profit was generated by each movie?

Star World
51,200
Star World: The Sequel
268,800
Total
320,000

Question 6

Sell or process further

Storey Corp. manufactures three products in a joint process. Each of the products can be
sold at split-off or may be processed further. Using the following per unit information,
determine which of the products should undergo further processing.

JP#1 JP#2 JP#3

Sales value at split-off $360 $290 $585

Sales value after further processing 410 330 650

Joint costs allocated at split-off 215 185 380

Costs of further processing 55 25 45

JP#1 JP#2 JP#3

$15
Net benefit (cost) of further processing $20
$(5)
Process Further?

No
JP#1

JP#2 Yes
 Process Further?

Yes
JP#3

Question 1

Benjamin Company
Benjamin Company produces two products from a joint process: X and Z. Joint processing
costs for this production cycle are $8,000.

Sales price Disposal Further Final sale

per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.

Refer to Benjamin Company. Using a physical measure, what amount of joint processing
cost is allocated to Product X (round to the nearest dollar)?

Select one:

a. $4,757

b. $4,000

c. $5,500
d. $3,243

1,500/3,700 * $8,000 = $3,243

Question 2

Benjamin Company
Benjamin Company produces two products from a joint process: X and Z. Joint processing
costs for this production cycle are $8,000.

Sales price Disposal Further Final sale

per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.

Refer to Benjamin Company. Using a physical measure, what amount of joint processing
cost is allocated to Product Z (round to the nearest dollar)?

Select one:

a. $3,243

b. $4,000

c. $4,757

d. $5,500

2,200/3,700 * $8,000 = $4,757

Question 3

Benjamin Company
Benjamin Company produces two products from a joint process: X and Z. Joint processing
costs for this production cycle are $8,000.
 Sales price Disposal Further Final sale
per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.

Refer to Benjamin Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product X (round to the nearest dollar)?

Select one:

a. $5,500

b. $4,000

c. $2,500

d. $3,243

Sales
price
at Split-
Yards off Total

X 1,500 $6.00 $9,000

Z 2,200 $9.00 $19,800

$28,800

$(9,000/28,800) * $8,000 = $2,500

Question 4

Benjamin Company
Benjamin Company produces two products from a joint process: X and Z. Joint processing
costs for this production cycle are $8,000.
 Sales price Disposal Further Final sale
per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.

Refer to Benjamin Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product Z (round to the nearest dollar)?

Select one:

a. $5,500

b. $4,000

c. $2,500

d. $4,757

Sales
price
at Split-
Yards off Total

X 1,500 $6.00 $9,000

Z 2,200 $9.00 $19,800

$28,800

$(9,000/28,800) * $8,000 = $2,500

Question 5

Benjamin Company
Benjamin Company produces two products from a joint process: X and Z. Joint processing
costs for this production cycle are $8,000.
 Sales price Disposal Further Final sale
per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

X 1,500 $6.00 $3.50 $1.00 $7.50

Z 2,200 9.00 5.00 3.00 11.25

Refer to Benjamin Company. Using net realizable value at split-off, what amount of joint
processing cost is allocated to Product X (round to the nearest dollar)?

Select one:

a. $5,500

b. $5,610

c. $4,000

d. $2,390

Sales
price
at NRV/
split- Disposal Split-
Yards off cost/yard off Total NRV

X 1,500 $6.00 $3.50 $1.00 $3,750

Z 2,200 $9.00 $5.00 $4.00 $8,800

$12,550

$(3,750/12,550)*$8,000 = $2,390

Question 6

Bennett Company
Bennett Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.
 Sales price Disposal Further Final sale
per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

A 1,800 $7.00 $4.50 $1.50 $8.00

C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.

Refer to Bennett Company. Using a physical measure, what amount of joint processing
cost is allocated to Product C (round to the nearest dollar)?

Select one:

a. $4,500

b. $5,318

c. $6,062

d. $3,682

2,600/4,400 * $9,000 = $5,318

Question 7

Bennett Company
Bennett Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.

Sales price Disposal Further Final sale

per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

A 1,800 $7.00 $4.50 $1.50 $8.00

C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Bennett Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product C (round to the nearest dollar)?

Select one:

a. $4,500

b. $3,682

c. $2,938

d. $6,062

Sales
price
at Split-
Yards off Total

A 1,800 $7.00 $12,600

C 2,600 $10.00 $26,000

$38,600

$(26,000/38,600)*$9,000 = $6,062

Question 8

Bennett Company
Bennett Company produces two products from a joint process: A and C. Joint processing
costs for this production cycle are $9,000.

Sales price Disposal Further Final sale

per yard at cost per yard at processing price per
Yards split-off split-off per yard yard

A 1,800 $7.00 $4.50 $1.50 $8.00

C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be
borne by the buyer.
Refer to Bennett Company. Using net realizable value at split-off, what amount of joint
processing cost is allocated to Product A (round to the nearest dollar)?

Select one:

a. $2,718

b. $4,500

c. $6,062

d. $6,282

Sales
price
at Disposal NRV/
split- cost Split-
Yards off /yard off Total NRV

A 1,800 $7.00 $4.50 $2.50 $4,500

C 2,600 $10.00 $6.00 $4.00 $10,400

$14,900

$(4,500/14,900) * $9,000 = $2,718

Question 9

Blum Company
Blum Company produces three products: A, B, and C from the same process. Joint costs
for this production run are $2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound

A 800 $6.50 $3.00 $2.00 $7.50

B 1,100 8.25 4.20 3.00 10.00

C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Blum Company will incur the following disposal costs
upon sale: A, $3.00; B, $2.00; and C, $1.00.

Refer to Blum Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product B (round to the nearest dollar)?

Select one:

a. $494

b. $927

c. $679

d. $700

(1,100/3,400) * $2,100 = $679

Question 10

Blum Company
Blum Company produces three products: A, B, and C from the same process. Joint costs
for this production run are $2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound

A 800 $6.50 $3.00 $2.00 $7.50

B 1,100 8.25 4.20 3.00 10.00

C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Blum Company will incur the following disposal costs
upon sale: A, $3.00; B, $2.00; and C, $1.00.

Refer to Blum Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product B (round to the nearest dollar)?

Select one:

a. $959

b. $700
c. $725

d. $416

Sales
price
at split-
Yards off Total

A 800 $6.50 $5,200

B 1,100 $10.00 $6.00

C 1,500 $8.00 $12,000

$26,275

$(9,075/26,275) * $2,100 = $725

Question 11

Blum Company
Blum Company produces three products: A, B, and C from the same process. Joint costs
for this production run are $2,100.

Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound

A 800 $6.50 $3.00 $2.00 $7.50

B 1,100 8.25 4.20 3.00 10.00

C 1,500 8.00 4.00 3.50 10.50

If the products are processed further, Blum Company will incur the following disposal costs
upon sale: A, $3.00; B, $2.00; and C, $1.00.

Refer to Blum Company. Using sales value at split-off, what amount of joint processing
cost is allocated to Product C (round to the nearest dollar)?

Select one:

a. $959
b. $700

c. $725

d. $416

Sales
price
at split-
Yards off Total

A 800 $6.50 $5,200

B 1,100 $10.00 $6.00

C 1,500 $8.00 $12,000

$26,275

$(12,000/26,275) * $2,100 = $725

The correct answer is: $959

Question 12

Bond Company
Bond Company is placing an ad in the local paper to advertise its products. The ad will run
for one week at a total cost of $5,500. Bond Company has four categories of products as
follows:

% of floor space Expected sales

occupied value

Hardware 20% $35,000

Hand Tools 15 15,000

Lawn Furniture 45 64,500

Light Fixtures 20 25,500

What amount of advertising cost should be allocated to hardware, assuming Bond

allocates based on percent of floor space occupied?

Select one:
a. $825

b. $2,475

c. $1,100

d. $1,375

$5,500 * 0.20 = $1,100

Question 13

Brock Company

Brock Company produces four floor cleaners from the same process: C, D, E, and G. Joint
product costs are $9,000. (Round all answers to the nearest dollar.)

Final sales
Sales price per Disposal cost per
price
barrel barrel Further
Barrels at split-off at split-off processing costs per barrel

C 750 $10.00 $6.50 $2.00 $13.50

D 1,000 8.00 4.00 2.50 10.00

E 1,400 11.00 7.00 4.00 15.50

G 2,000 15.00 9.50 4.50 19.50

If Brock sells the products after further processing, the following disposal costs will be
incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.

Using a physical measurement method, what amount of joint processing cost is allocated
to Product E?

Select one:

a. $2,447

b. $1,311

c. $3,495

d. $1,748

(1,400/5,150) * $9,000 = $2,447

Question 14

Brock Company

Brock Company produces four floor cleaners from the same process: C, D, E, and G. Joint
product costs are $9,000. (Round all answers to the nearest dollar.)

Final sales
Sales price per Disposal cost per
price
barrel barrel Further
Barrels at split-off at split-off processing costs per barrel

C 750 $10.00 $6.50 $2.00 $13.50

D 1,000 8.00 4.00 2.50 10.00

E 1,400 11.00 7.00 4.00 15.50

G 2,000 15.00 9.50 4.50 19.50

If Brock sells the products after further processing, the following disposal costs will be
incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.

Using a physical measurement method, what amount of joint processing cost is allocated
to Product G?

Select one:

a. $1,311

b. $1,748

c. $2,447

d. $3,495

(2,000/5,150) * $9,000 = $3,495

Question 15

Brock Company

Brock Company produces four floor cleaners from the same process: C, D, E, and G. Joint
product costs are $9,000. (Round all answers to the nearest dollar.)
 Final sales
Sales price per Disposal cost per
price
barrel barrel Further
Barrels at split-off at split-off processing costs per barrel

C 750 $10.00 $6.50 $2.00 $13.50

D 1,000 8.00 4.00 2.50 10.00

E 1,400 11.00 7.00 4.00 15.50

G 2,000 15.00 9.50 4.50 19.50

If Brock sells the products after further processing, the following disposal costs will be
incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.

Using sales value at split-off, what amount of joint processing cost is allocated to Product
D?

Select one:

a. $4,433

b. $2,276

c. $1,108

d. $1,182

Product Barrels Sales Price at Split-Off Total

C 750 $10.00 $7,500

D 1,000 $8.00 $8,000

E 1,400 $11.00 $30,000

G 2,000 $15.00 $60,900

$(8,000/60,900) * $9,000 = $1,182

Question 16

Campbell Company

Campbell Company produces three products from the same process that has joint
processing costs of $4,100. Products R, S, and T are produced in the following quantities:
250 gallons, 400 gallons, and 750 gallons. Campbell Company also incurred advertising
costs of $60,000. The ad was used to run sales for all three products. The three products
occupy floor space in the following ratio: 5:4:9.

(Round all answers to the nearest dollar.)

Using gallons as the physical measurement, what amount of joint processing cost is
allocated to Product S?

Select one:

a. $1,171

b. $1,367

c. $2,196

d. $732

(400/1,400) * $4,100 = $1,171

Question 17

Campbell Company

Campbell Company produces three products from the same process that has joint
processing costs of $4,100. Products R, S, and T are produced in the following quantities:
250 gallons, 400 gallons, and 750 gallons. Campbell Company also incurred advertising
costs of $60,000. The ad was used to run sales for all three products. The three products
occupy floor space in the following ratio: 5:4:9.

(Round all answers to the nearest dollar.)

Using gallons as the physical measurement, what amount of joint processing cost is
allocated to Product T?

Select one:

a. $732

b. $2,196

c. $1,171

d. $1,367
(750/1,400) * $4,100 = $2,196

Question 18

Campbell Company

Campbell Company produces three products from the same process that has joint
processing costs of $4,100. Products R, S, and T are produced in the following quantities:
250 gallons, 400 gallons, and 750 gallons. Campbell Company also incurred advertising
costs of $60,000. The ad was used to run sales for all three products. The three products
occupy floor space in the following ratio: 5:4:9.

(Round all answers to the nearest dollar.)

Assume that Campbell chooses to allocate its advertising cost among the three products.
What amount of advertising cost is allocated to Product R using the floor space ratio?

Select one:

a. $30,000

b. $16,667

c. $1,139

d. $17,806

$60,000 * 5/18 = $16,667