Buckle Company produces three joint products from seaweed. At the split-off poin

Question

Buckle Company produces three joint products from seaweed. At the split-off point, three basic products emerge: Sea Tea, Sea Paste, and Sea Powder. Each of these products can either be sold at the split-off point or be processed further. If they are processed further, the resulting products can be sold as delicacies to health food stores. Cost and revenue information is as follows: Sales Value and Additional Costs If Processed Further Pounds Sales Value Final Sales Additional Product Produced at Split-Off Value Cost Sea Tea 9,000 $ 60,000 $ 90,000 $ 35,000 Sea Paste 5,700 84,900 160,000 50,000 Sea Powder 2,000 70,000 85,000 14,000 a-1 Compute the Incremental benefit (cost) of further processing to these products. Sea Tea Sea Paste Sea Powder Incremental benefit (cost) $_______ $________ $__________ a-2 Which products should Buckle process beyond the split-off point? O Sea tea and sea paste O Sea paste and sea powder O Sea powder and sea tea b. At what price per pound would it be advantageous for Buckle Company to sell Sea Paste at the split-off point rather than process it further? (Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.) Minimum price per pound $________

Explanation / Answer

Accounts Payable $52,000 Sales Taxes Payable 7,700 Unearned Service Revenue 16,000 During January the following selected transactions occurred. Jan. 5 Sold merchandise for cash totaling $22,680, which includes 8% sales taxes. 12 Provided services for customers who had made advance payments of $10,000. (Credit Service Revenue.) 14 Paid state revenue department for sales taxes collected in December 2007 ($7,700). 20 Sold 800 units of a new product on credit at $50 per unit, plus 8% sales tax. 21 Borrowed $18,000 from UCLA Bank on a 3-month, 8%, $18,000 note. 25 Sold merchandise for cash totaling $12,420, which includes 8% sales taxes. Instructions (a) Journalize the January transactions. (b) Journalize the adjusting entries at January 31 for the outstanding notes payable. (Hint: Use one-third of a month for the UCLA Bank note.) (c) Prepare the current liabilities section of the balance sheet at January 31, 2008. Assume no change in accounts payable. SOLUTION

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