Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to

Question

Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of November: Trees processed: 100 trees (yield is 60,000 sheets of paper and 60,000 pencil casings and no scrap) Production: paper 60,000 sheets pencil casings 60,000 Sales: paper 58,000 at $0.04 per page pencil casings 60,000 at $0.10 per casing The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of paper and 60,000 pencil casings is $3,000. Yakima's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.

If the sales value at splitoff method is used what is the joint cost allocated to paper and pensil? a. 7143 & 2857 b. 100 & 3450 c. 870 & 2000 d. None of this

Explanation / Answer

Given data,

Joint Cost = $3000

Selling price of paper = $0.04

Papers sold = 58000

Sale Value of paper = 58000 * 0.04 = $2320

Selling Price of pencil Casing = $0.10

Pencil Casings sold = 60000

Sale Value of Pencil Casings = 60000 * 0.10 = $6000

Total Sales = $2320 + $6000 = $8320

Allocation of Joint Cost:

Paper = $3000 * 2320 / 8320 = $836.538

Pencil Casing = $3000 * 6000 / 8320 = $2163.462

Answer is d) None of these

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.