Homework: Chapter 16 Homework Save Score: 0 of 20 pts 4015(O complete) HW Score:
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Homework: Chapter 16 Homework Save Score: 0 of 20 pts 4015(O complete) HW Score: 0%, 0 of 90 pts Question Help E16-19 (similar to) The Rouse Spirits Company produces two products- -furpentine and methanol (wood alcohol) -by a joint process. Joint costs amount to $125,000 per batch of output. Each batch totals 13.500 gallons 25% methanol and 75% turpentine Both products are processed further without gain or loss in volume Separable processing costs are methanol, $4 per gallon, and turpentine $2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon Read the requirements Requirement 1. How much of the joint costs per batch will be allocated to turpentine and to methanol, assuming that joint costs are allocated based on the number of gallons at splitoff point? Methanol Turpentine Total Physical measure of total production Weighting Joint costs allocated Requirements How much of the joint costs per batch will be allocated to turpentine and to methanol, assuming that joint costs are allocated based on the number of gallons at splitoff point? 1. 2. If joint costs are allocated on an NRV basis, how much of the joint costs will 3. Prepare product-line income statements per batch for requirement 1 and 2 4. The company has discovered an additional process by which the methanol be allocated to turpentine and to methanol? Assume no beginning or ending inventories (wood alcohol) can be made into a pleasant-tasting alcoholic beverage The selling price of this beverage would be $55 a gallon Additional processing would increase separable costs $12 per galon (in addition to the 54 per gallon separable cost required to yield methanol). The company would have to pay excise taxes of 20% on the selling price of the beverage Assuming no other changes in cost, what is the joint cost applicable to the wood alcohol (using the NRV method)? Should the company produce the alcohollc beverage? Show your computations Print Done Enter any number in the edit fields and then click Check Answer Clear All Check Answer 6 remainingExplanation / Answer
1.
Allocation of joint costs on the basis of number of gallons at split off.
2.
Allocation of joint costs on the basis of NRV.
3.
4. The company should produce the alcoholic beverage as the net operating income goes up from $77,500 to $111,250 if processed further as shown below.
Methanol Turpentine total Physical weight of total production 3375 10125 13500 Weighting 25% 75% 100% Joint costs allocated 31250 93750 125000Related Questions
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