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Class Practice Math With Solution Joint & by Product

Class Practice Math with solution Joint & By Product

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rumelrashid.66
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61 views20 pages

Class Practice Math With Solution Joint & by Product

Class Practice Math with solution Joint & By Product

Uploaded by

rumelrashid.66
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Class Practice 01: Horngreen Problem for self-study


Inorganic Chemicals (IC) processes salt into various industrial products. In July 2012, IC
incurred joint costs of $100,000 to purchase salt and convert it into two products: caustic soda
and chlorine. Although there is an active outside market for chlorine, IC processes all 800 tons
of chlorine it produces into 500 tons of PVC (polyvinyl chloride), which is then sold. There was
no beginning or ending inventories of salt, caustic soda, chlorine, or PVC in July. Information for
July 2012 production and sales follows:

Requirement:
1. Allocate the joint costs of $100,000 between caustic soda and PVC under (a) the sales
Required value at split off method and (b) the physical-measure method.
2. Allocate the joint costs of $100,000 between caustic soda and PVC under the NRV
method.
3. Under the three allocation methods in requirements 1 and 2, what is the gross-margin
percentage of (a) caustic soda and (b) PVC?
4. Lifetime Swimming Pool Products offers to purchase 800 tons of chlorine in August
2012 at $75 per ton. Assume all other production and sales data are the same for August as
they were for July. This sale of chlorine to Lifetime would mean that no PVC would be produced
by IC in August. How would accepting this offer affect IC’s August 2012 operating income?

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
2|Page

Solution:
The following picture provides a visual illustration of the main facts in this problem.
Note that caustic soda is sold as is while chlorine, despite having a market value at splitoff, is sold
only in processed form as PVC. The goal is to allocate the joint costs of $100,000 to the final
products—caustic soda and PVC. However, since PVC exists only in the form of chlorine at the
split off point, we use chlorine’s sales value and physical measure as the basis for allocating joint
costs to PVC under the sales value at split off and physical measure at split off methods. Detailed
calculations are shown next.

1a. Sales value at split off method:

1b. Physical-measure method

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
3|Page

2. Net realizable value (NRV) method:

3a. Gross-margin percentage of caustic soda

3b. Gross-margin percentage of PVC

4. Sale of chlorine versus processing into PVC:

If IC sells 800 tons of chlorine to Lifetime Swimming Pool Products instead of further
processing it into PVC, its August 2012 operating income will be reduced by $20,000.

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
4|Page

Class Practice math 02: Horngren 16-24 May 2023 Qs 06 B

Solution:

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
5|Page

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
6|Page

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
7|Page

Class Practice Math 03: Horngren 16-33 Jan 2024 Qs 06 B

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
8|Page

Solution:

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
9|Page

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
10 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
11 | P a g e

Class Practice math 04: Horngreen 16-36

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
12 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
13 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
14 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
15 | P a g e

Class Practice Math 05: Horngreen 16-38 May 2024 Qs 6 B (Req 1-2)

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
16 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
17 | P a g e

Class Practice Math 06: Horngreen 16-39

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
18 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
19 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product
20 | P a g e

Faculty: Md. Mazharul Haque Razib ACMA/Course: Cost Accounting / /Jan to June 2024 session(offline)/
[email protected] / Joint & By product

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