Quatro Corporation manufactures two chemicals (Flextra and Hydro) in a joint process. Data from a recent month follow.Direct materials used: $360,000Direct labor: $150,000Manufacturing overhead: $690,000Manufacturing output:Flextra: 40,000 gallonsHydro: 120,000 gallonsFlextra sells for $15 per gallon and Hydro sells for $20 per gallon.Required:A. Compute the total joint costs to be allocated to Flextra and Hydro.B. Compute the joint costs that would be allocated to Flextra by using the physical-units method.C. Compute the joint costs that would be allocated to Hydro by using the relative-sales-value method.D. Assume that Hydro can be converted into a more refined product, Hydro-R, in a totally separable process at an additional cost of $4 per gallon. If the refined product can be sold in
the marketplace for $26 per gallon, compute the net realizable value of Hydro-R.
What will be an ideal response?
A. $1,200,000 ($360,000 + $150,000 + $690,000)
B. Flextra constitutes 25% of the productive output [40,000 ÷ (40,000 + 120,000)] and would therefore absorb $300,000 of joint cost ($1,200,000 × 25%).
C. The total sales value of the two products is $3,000,000: Flextra (40,000 gallons × $15 = $600,000) + Hydro (120,000 gallons × $20 = $2,400,000). Since Hydro has 80% of the sales value ($2,400,000 ÷ $3,000,000), the company will allocate $960,000 of joint cost ($1,200,000 × 80%).
D. Sales value (120,000 gallons × $26 = $3,120,000) - costs beyond split-off (120,000 gallons × $4 = $480,000) = $2,640,000.
You might also like to view...
If you are a marketing manager and your home market is maturing, which of the following is the best strategy to follow?
A) increase the advertising budget B) explore opportunities abroad C) terminate the product line D) follow the same strategies aggressively
With a right of survivorship the proceeds in a joint bank account pass to the surviving account owner
Indicate whether the statement is true or false.
Jerry looked up to see one of his workers, Gus, walk into his office. Gus said, "Jerry, you really need to do something about Rick, Nicky, and those other knuckleheads on the first shift. Every time I come into work around 4 pm, they're in the locker room, swapping ethnic jokes. I'm getting tired of it." Jerry recognizes that Gus is filing a complaint about
A. ethnocentrism. B. culture shock. C. a glass ceiling. D. a hostile work environment. E. quid pro quo conditions.
A firm that makes electronic circuits has been ordering a certain raw material 250 ounces at a time. The firm estimates that carrying cost is I = 30% per year, and that ordering cost is about $20 per order
The current price of the ingredient is $200 per ounce. The assumptions of the basic EOQ model are thought to apply. For what value of annual demand is their action optimal?