1
a
Allocation of Joint Costs using Sales Value Special B/ Beef Special S/ Shrimp
at Splitoff Method Ramen Ramen
Sales value of total production at splitoff point $ 100,000 $ 300,000
Weighting 25.00% 75.00%
Joint costs allocated $ 60,000 $ 180,000
Product-Line Income Statement for June Special B/ Beef Special S/ Shrimp
2012 Ramen Ramen
Revenues $ 216,000 $ 600,000
Deduct joint costs allocated (from Panel A) $ 60,000 $ 180,000
Deduct separable costs $ 48,000 $ 168,000
Gross margin $ 108,000 $ 252,000
Gross margin Percentage 50% 42%
b
Allocation of Joint Costs using Sales Value Special B/ Beef Special S/ Shrimp
at Measure Method Ramen Ramen
Physical measure of total produstion (tons) $ 10,000 $ 20,000
Weighting 33% 67%
Joint costs allocated $ 80,000 $ 160,000
Product-Line Income Statement for June Special B/ Beef Special S/ Shrimp
2012 Ramen Ramen
Revenues $ 216,000 $ 600,000
Deduct joint costs allocated (from Panel A) $ 80,000 $ 160,000
Deduct separable costs $ 48,000 $ 168,000
Gross margin $ 88,000 $ 272,000
Gross margin Percentage 41% 45%
c
Allocation of Joint Costs using Net Special B/ Beef Special S/ Shrimp
Realizable Value Method Ramen Ramen
Final sales value of total production during acc $ 216,000 $ 600,000
Deduct separable costs $ 48,000 $ 168,000
Net realizable value at splitoff point $ 168,000 $ 432,000
Weighting 28.00% 72.00%
Joint costs allocated $ 67,200 $ 172,800
Product-Line Income Statement for June Special B/ Beef Special S/ Shrimp
2012 Ramen Ramen
Revenues $ 216,000 $ 600,000
Deduct joint costs allocated (from Panel A) $ 67,200 $ 172,800
Deduct separable costs $ 48,000 $ 168,000
Gross margin $ 100,800 $ 259,200
Gross margin Percentage 46.67% 43.20%
2
Sherrie Dong probably performed the analysis shown below to arrive at the net loss of$2,228 from
marketing the stock:
Allocation of Joint Costs using Net Special B/ Beef Special S/ Shrimp
Realizable Value Method Ramen Ramen
Sales value of total production at splitoff point $ 100,000 $ 300,000
Weighting 23.8095% 71.4286%
Joint costs allocated $ 57,143 $ 171,429
PANEL B: Product-Line Income Statement Special B/ Beef Special S/ Shrimp
for June 2012 Ramen Ramen
Revenues $ 216,000 $ 600,000
Separable processing costs $ 48,000 $ 168,000
Joint costs allocated (from Panel A) $ 57,143 $ 171,429
Gross margin $ 110,857 $ 260,571
Deduct marketing costs
Operating income
Total
$ 400,000
$ 240,000
Total
$ 816,000
$ 240,000
$ 216,000
$ 360,000
44%
Total
$ 30,000
$ 240,000
Total
$ 816,000
$ 240,000
$ 216,000
$ 360,000
44%
Total
$ 816,000
$ 216,000
$ 600,000
$ 240,000
Total
$ 816,000
$ 240,000
$ 216,000
$ 360,000
e net loss of$2,228 from
Stock Total
$ 20,000 $ 420,000
4.7619% 100%
$ 11,429 $ 240,000
Stock Total
$ 20,000 $ 836,000
$ - $ 216,000
$ 11,429 $ 240,000
$ 8,571 $ 380,000
$ 10,800 $ 10,800
$ -2,229 $ 369,200
1
Revenues from C $ 96,000
Deduct :
Gross margin, 10% of revenues $ 9,600
Marketing costs, 20% of revenues $ 19,200
Peanut Butter Department separable cost $ 12,000
Net realizable value (less gross margin) of C $ 55,200
Joint costs $ 180,000
Deduct byproduct contribution $ 55,200
Net joint costs to be allocated $ 124,800
Deduct
Unit Sales Final Sales Net Realizable
Quantity Separable
Price Value Value at Splitoff
Processing Cost
A $ 12,000 $ 12 $ 144,000 $ 27,000 $ 117,000
B $ 65,000 $ 3 $ 195,000 $ - $ 195,000
Totals $ 339,000 $ 27,000 $ 312,000
Add
Joint Costs Separable
Total Costs Units Unit Cost
Allocation Processing
Costs
A $ 46,800 $ 27,000 $ 73,800 $ 12,000 $ 6.15
B $ 78,000 $ - $ 78,000 $ 65,000 $ 1.20
Totals $ 124,800 $ 27,000 $ 151,800 $ 77,000
Deduct
Unit Sales Final Sales Net Realizable
Quantity Separable
Price Value Value at Splitoff
Processing Cost
A $ 12,000 $ 12 $ 144,000 $ 27,000 $ 117,000
B $ 65,000 $ 3 $ 195,000 $ - $ 195,000
C $ 16,000 $ 6 $ 96,000 $ 31,200 $ 64,800
Totals $ 435,000 $ 58,200 $ 376,800
Add
Joint Costs Separable
Total Costs Units Unit Cost
Allocation Processing
Costs
A $ 55,892 $ 27,000 $ 82,892 $ 12,000 $ 6.91
B $ 93,153 $ - $ 93,153 $ 65,000 $ 1.43
C $ 30,955 $ 12,000 $ 42,955 $ 16,000 $ 2.68
Totals $ 180,000 $ 39,000 $ 219,000 $ 93,000
Allocation of
Weighting $124.800 Joint
Costs
37.5% $ 46,800
62.5% $ 78,000
$ 124,800
Allocation of
Weighting $124.800 Joint
Costs
31.1% $ 55,892
51.8% $ 93,153
17.2% $ 30,955
$ 180,000
1
a
Sales Value of Total Allocation of
Production at Weighting $96,000 Joint
Splitoff Costs
A $ 84,000 0.35 $ 33,600
B $ 72,000 0.30 $ 28,800
C $ 24,000 0.10 $ 9,600
D $ 60,000 0.25 $ 24,000
$ 240,000 1.00 $ 96,000
b
Allocation of
Physical Measure of
Weighting $96,000 Joint
Total Production
Costs
A $ 322,400 0.62 $ 59,520
B $ 119,600 0.23 $ 22,080
C $ 52,000 0.10 $ 9,600
D $ 26,000 0.05 $ 4,800
$ 520,000 1.00 $ 96,000
c
Allocatio
n of
Final Sales Value of Separable Net Realizable
Weighting $96,000
Total Production Costs Value at Splitoff
Joint
Costs
A $ 300,000 $ 249,600 $ 50,400 0.36 $ 34,560
B $ 160,000 $ 102,400 $ 57,600 0.41 $ 39,497
C $ 24,000 $ - $ 24,000 0.17 $ 16,457
D $ 160,000 $ 152,000 $ 8,000 0.06 $ 5,486
$ 140,000 1.00 $ 96,000
a. Sales value at splitoff method :
Super A Super B C
Revenues $ 300,000 $ 160,000 $ 24,000
Joint costs $ 33,600 $ 28,800 $ 9,600
Separable costs $ 249,600 $ 102,400 $ -
Total COGS $ 283,200 $ 131,200 $ 9,600
Gross margin $ 16,800 $ 28,800 $ 14,400
Gross-margin percentage 5.6% 18% 60%
b. Physical-measure method :
Super A Super B C
Revenues $ 300,000 $ 160,000 $ 24,000
Joint costs $ 59,520 $ 22,080 $ 9,600
Separable costs $ 249,600 $ 102,400 $ -
Total COGS $ 309,120 $ 124,480 $ 9,600
Gross margin $ -9,120 $ 35,520 $ 14,400
Gross-margin percentage -3.04% 22.2% 60%
c. Net realizable value method :
Super A Super B C
Revenues $ 300,000 $ 160,000 $ 24,000
Joint costs $ 34,560 $ 39,497 $ 16,457
Separable costs $ 249,600 $ 102,400 $ -
Total COGS $ 284,160 $ 141,897 $ 16,457
Gross margin $ 15,840 $ 18,103 $ 7,543
Gross-margin percentage 5.28% 11.31% 31.4%
2
Further Processing of A into Super A :
Incremental revenue $ 216,000
Incremental costs $ 249,600
Incremental operating loss from further processing ,
Further Processing of B into Super B :
Incremental revenue $ 88,000
Incremental costs $ 102,400
Incremental operating loss from further processing $ -14,400
Further Processing of D into Super D :
Incremental revenue $ 100,000
Incremental costs $ 152,000
Incremental operating loss from further processing $ -52,000
Super D Total
$ 160,000 $ 644,000
$ 24,000 $ 96,000
$ 152,000 $ 504,000
$ 176,000 $ 600,000
$ -16,000 $ 44,000
-10% 6.83%
Super D Total
$ 160,000 $ 644,000
$ 4,800 $ 96,000
$ 152,000 $ 504,000
$ 156,800 $ 600,000
$ 3,200 $ 44,000
2% 6.83%
Super D Total
$ 160,000 $ 644,000
$ 5,486 $ 96,000
$ 152,000 $ 504,000
$ 157,486 $ 600,000
$ 2,514 $ 44,000
1.57% 6.83%
1
a
Milk
Chocolate
Chocolate/Liquor
Powder/Liquor Base
Base
Sales value of total production at splitoff $ 12,600 $ 23,400
Weighting 0.35 0.65
Joint costs allocated $ 10,500 $ 19,500
b
Milk
Chocolate
Chocolate/Liquor
Powder/Liquor Base
Base
Physical measure of total production $ 600 $ 900
Weighting 0.40 0.60
Joint costs allocated $ 12,000 $ 18,000
Total
$ 36,000
$ 30,000
Total
$ 1,500
$ 30,000
