Acc561 Introduction to Management Accounting: 12-36 Hernandez Chemical Company’s production process

Acc561 Introduction to Management Accounting: 12-36 Hernandez Chemical Company’s production process

Acc561 Introduction to Management Accounting

12-36 Joint Costs and Process Map
Hernandez Chemical Company’s production process for two of its solvents can be diagrammed using a process map as shown in Exhibit 12-25.

The cost of the joint input, including processing costs before the split-off point, is $400,000. Solvent A can be sold at the split-off point for $20 per gallon and solvent B for $60 per gallon.
Costs
Indirect materials (Pounds) 55,000
Base materials (gallons) 220,000
Processing machine (machine hours) 80,000
Labor (labor hours) 45,000
Total Costs $400,000

at split-off point:
Yield Selling Price
Solvent A 20,000 $20
Solvent B 10,000 $60
Total 30,000

1. Allocate the $400,000 joint cost to solvents A and B by the physical-units method.
2. Allocate the $400,000 joint cost to solvents A and B by the relative-sales-value method.
Acc561 Introduction to Management Accounting: 12-36 Hernandez Chemical Company’s production process
.XLS file (33.5KB)
$16
Total price:
$16
Powered by