Problem 1 – Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X2, the joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:
|
Product |
Cases |
Sales Value at Splitoff Point |
Separable Costs |
Selling Price |
|
Catsup |
100,000 |
$6 per case |
$3.00 per case |
$28 per case |
|
Juice |
150,000 |
8 per case |
5.00 per case |
25 per case |
|
Canned |
200,000 |
5 per case |
2.50 per case |
10 per case |
Question: Determine the amount allocated to each product if the estimated net realizable value method is used, and compute the cost per case for each product.
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.
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.