Problem 2 - Zenon Chemical, Inc. processes pine rosin into three products: turpe
ID: 2351566 • Letter: P
Question
Problem 2 - Zenon Chemical, Inc. processes pine rosin into three products: turpentine, paint thinner, and spot remover. During May, the joint costs of processing were $240,000. Production and sales value information for the month is as follows:Product
Units Produced
Sales Value at Splitoff Point
Turpentine
6,000 liters
$60,000
Paint thinner
6,000 liters
50,000
Spot remover
3,000 liters
25,000
Question: Determine the amount of joint cost allocated to each product if the physical-measure method is used. (10 points)
Problem 3 - Oregon Lumber processes timber into four products. During January, the joint costs of processing were $280,000. There was no inventory at the beginning of the month. Production and sales value information for the month is as follows:
Sales Value at
Product
Board feet
Splitoff Point
Ending Inventory
2 x 4's
6,000,000
$0.30 per board foot
500,000 bdft.
2 x 6's
3,000,000
0.40 per board foot
250,000 bdft.
4 x 4's
2,000,000
0.45 per board foot
100,000 bdft.
Slabs
1,000,000
0.10 per board foot
50,000 bdft.
Question: Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to three decimal places when necessary. (10 points)
Explanation / Answer
Cost Allocation:
Turpentine
$ 96,000.00
Paint thinner
$ 96,000.00
Spot remover
$ 48,000.00
$ 240,000.00
Take the 6,000 liters of turpentine produced divided by the total liters produced, 15,000.
Then multiply that by $240k to get the share of costs that should be allocated to turpentine.
Follow similar logic for the next 2 products.
===============================
Cost Allocation:
Turpentine
$ 96,000.00
Paint thinner
$ 96,000.00
Spot remover
$ 48,000.00
$ 240,000.00
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