Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Shelly Inc. manufactures Nuts and Bolts. The initial stages of manufacturing inv

ID: 2707526 • Letter: S

Question

Shelly Inc. manufactures Nuts and Bolts.  The initial stages of manufacturing involve joint costs totally $50,000.  At the split-off point we have 4,000 lbs. of Nuts which can sell for $18 per pound and 6,000 lbs. of Bolts which can sell for $13.50 per pound.

                Required: (1 pt each)

1.     Assuming joint costs are allocated using relative salves value, what amount of joint cost should be allocated to Nuts?

2.     Assuming joint costs are allocated using relative salves value, what amount of joint cost should be allocated to Bolts?

3.     Assuming joint costs are allocated using physical units, what amount of joint cost should be allocated to Nuts?

4.     Assuming joint costs are allocated using physical units, what amount of joint cost should be allocated to Bolts?

Shelly Inc. manufactures Nuts and Bolts. The initial stages of manufacturing involve joint costs totally $50,000. At the split-off point we have 4,000 lbs. of Nuts which can sell for $18 per pound and 6,000 lbs. of Bolts which can sell for $13.50 per pound.

Explanation / Answer

1. Assuming joint costs are allocated using relative salves value, what amount of joint cost should be allocated to Nuts?

Total Sale value = 4000*18 + 6000*13.50 = 153000


So JC for Nuts = 50000*(4000*18/153000) = $23,529


2. Assuming joint costs are allocated using relative salves value, what amount of joint cost should be allocated to Bolts?

So JC for Bolt = 50000*(6000*13.5/153000) = $26,471


3. Assuming joint costs are allocated using physical units, what amount of joint cost should be allocated to Nuts?

Total Qty = 4000+6000 = 10000


So JC for Nuts = 50000*4000/10000 = $20,000


4. Assuming joint costs are allocated using physical units, what amount of joint cost should be allocated to Bolts?

So JC for Bolts = 50000*6000/10000 = $30,000

Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
Chat Now And Get Quote