Do joint costs affect a sell as is or process further decision? why or why not?
Do joint costs affect a sell as is or process further decision? why or why not?
Homework Answers
ANSWER:
- Joint costs don’t affect your “sell as is or process further” decision as they are irrelevant.
- This is so because joint costs are the same, whichever decision you take - whether you sell the product at split-off point or process further.
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Do joint costs affect a sell as is or process further decision?
why or why not?
In a sell-or-process-further decision, the decision will be to sell at the split-off point if the...
In a sell-or-process-further decision, the decision will be to sell at the split-off point if the incremental revenue from processing further is: a) less than the costs of the common process b) less than the incremental cost of processing c) more than the incremental cost of processing d) less than the revenue from selling at the split-off point
SELL AT SPLIT – OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION Lauricella Inc. produces...
SELL AT SPLIT – OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION Lauricella Inc. produces three products from a common set of inputs for $95,000. Other sales and cost data follow: Unit Sales Price ____ Costs After At After further Split-off Product Quantity Split-off Processing Point__ Regular 8,000 $ 8 $ 10 $ 10,000 Special 5,000 5 8 15,000 Premium 4,000 6 10 20,000 REQUIRED: Which products should...
Options for 1-6: (1): process further / sell as is (2): decreases / increases (3): process further / sell as...
Options for 1-6:
(1): process further / sell as is
(2): decreases / increases (3): process
further / sell as is (4): be higher if they
do / be lower if they do (5): different / the same
(6): is / is not
3. Interlock Soy Products (USP) buys soybeans and processes them into other soy products. Each ton of soybeans that USP purchases for $320 can be converted for an additional $200 into 675 lbs of soy meal and 120 gallons of soy oil....
Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two...
Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 14,000 units of overs and 35,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, $18,000; unders, $19,900. Overs sell for $2.00 per unit; unders sell for $3.14 per unit. Required: 1. Allocate the $50,000 joint costs using the estimated...
Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two...
Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 15,000 units of overs and 35,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, $20,000; unders, $19,900. Overs sell for $2.00 per unit; unders sell for $3.14 per unit. Required: 1. Allocate the $50,000 joint costs using the estimated...
(c) Identify the revenue or expense amounts necessary to make a sell-or-process-further decision and the reasons...
(c) Identify the revenue or expense amounts necessary to make a sell-or-process-further decision and the reasons behind them. [5 marks) (d) Identify the four methods of allocating joint costs to individual products and the most preferred method among accountants. (5 marks]
In a sell or process further decision, consider the following costs: A variable production cost incurred...
In a sell or process further decision, consider the following costs: A variable production cost incurred prior to split-off. A variable production cost incurred after split-off. An avoidable fixed production cost incurred after split-off. Which of the above costs is (are) not relevant in a decision regarding whether the product should be processed further? Multiple Choice Only I Only III Only I and II Only I and III
Legacy Company currently produces three products from a joint process. The joint process has total costs...
Legacy Company currently produces three products from a joint process. The joint process has total costs of $210,000 per month. All three products, A, B & C, are immediately saleable as they come out of the joint process. Alternatively, any of the products could continue on with additional processing and be sold as a more complete product. The following information is available: Units Immediate Sales Price Later Sales Price Unit Cost of Further Processing A 46,000 $ 6 $ 9...
32. When producing joint products, what are the relevant costs for a decision to sell or process...
32. When producing joint products, what are the relevant costs for a decision to sell or process further? a. Joint costs b. Costs incurred before the splitoff point c. Costs incurred at the splitoff point d. Costs incurred after the splitoff point. 33. Which of the following describes the cost of maintaining warehouse facilities? a. carrying costs. b. set-up costs. c. order costs. d. sunk costs. 34. Which of the following is a method of managing purchasing, production, and sales, by which the...
In making decisions about whether to sell or further process joint products, allocated joint cost amounts...
In making decisions about whether to sell or further process joint products, allocated joint cost amounts are __________. essential useful not relevant useful depending on the method chosen
Options for 1-6:
(1): process further / sell as is
(2): decreases / increases (3): process
further / sell as is (4): be higher if they
do / be lower if they do (5): different / the same
(6): is / is not
3. Interlock Soy Products (USP) buys soybeans and processes them into other soy products. Each ton of soybeans that USP purchases for $320 can be converted for an additional $200 into 675 lbs of soy meal and 120 gallons of soy oil....
(c) Identify the revenue or expense amounts necessary to make a sell-or-process-further decision and the reasons behind them. [5 marks) (d) Identify the four methods of allocating joint costs to individual products and the most preferred method among accountants. (5 marks]
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