1) To-Go produces milk and sour cream from a joint process. During June, the company produced 240,000 quarts of milk and 190,000 pints of sour cream (there are two pints in a quart). Sales value at split-off point was $377,400 for the milk and $177,600 for the sour cream. The milk was assigned $125,800 of the joint cost. (Round proportions to the nearest whole percentage and dollar amounts to the nearest whole dollar.)
Using the sales value at split-off approach, determine the total joint cost for June.
Assume, instead, that the joint cost was allocated based on the number of quarts produced. What was the total joint cost incurred in June?
2) Your employer engages in numerous joint processes that produce significant quantities and types of by-product. You have been asked to give a report to management on the best way to account for by-product. Develop criteria for making such a choice and provide reasons for each criterion selected. On the basis of your criteria, along with any additional assumptions you wish to provide about the nature of the company you work for, recommend a particular method of accounting for by-product and explain why you consider it to be better than the alternatives.
3) Illinois Soybeans operates a processing plant in which soybeans are crushed to create soybean oil and soybean meal. The company purchases soybeans by the bushel (60 pounds). From each bushel, the normal yield is 11 pounds of soybean oil, 44 pounds of soybean meal, and 5 pounds of waste. For March, Illinois Soybeans purchased and processed 5,000,000 bushels of soybeans. The yield in March on the soybeans was equal to the normal yield. The following costs were incurred for the month: Soybeans $47,500,000 Conversion costs 2,300,000 At the end of March, there was no in-process or raw material in inventory. Also, there was no beginning Finished Goods Inventory. For the month, 60 percent of the soybean oil and 75 percent of the soybean meal was sold. a. Allocate the joint cost to the joint products on the basis of pounds of product produced. b. Calculate the cost of goods sold for March. c. Calculate the cost of Finished Goods Inventory at the end of March.
Discussion Question: Unit 7: Allocation of Joint Cost and Accounting for By-Products Discussion