Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $40,200 per batch. The joint process produces 5,000 units of Chem-A with a market value of $188,200, and 20,000 units of Chem-B with a market value of $41,350. The conversion cost of the joint process is $21,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The company never holds any inventory. Required: a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product? c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs? Complete this question by entering your answers in the tabs below. Required A Required B Required C Realizable value Allocation of joint cost Reported profit What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign. Answer is complete but not entirely correct. Chem-A $ 188,200 S 41,350✔ 22,032 X $ 166,168 XX S Chem-B 39,168 X 2,182 x
Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $40,200 per batch. The joint process produces 5,000 units of Chem-A with a market value of $188,200, and 20,000 units of Chem-B with a market value of $41,350. The conversion cost of the joint process is $21,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The company never holds any inventory. Required: a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product? c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs? Complete this question by entering your answers in the tabs below. Required A Required B Required C Realizable value Allocation of joint cost Reported profit What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs? Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign. Answer is complete but not entirely correct. Chem-A $ 188,200 S 41,350✔ 22,032 X $ 166,168 XX S Chem-B 39,168 X 2,182 x
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 27E: Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this...
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Transcribed Image Text:Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $40,200 per batch. The joint process
produces 5,000 units of Chem-A with a market value of $188,200, and 20,000 units of Chem-B with a market value of $41,350. The
conversion cost of the joint process is $21,000 per batch. Elsa Products allocates joint costs using the physical quantities method. The
company never holds any inventory.
Required:
a. What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?
b. If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and
profit will be reported for each product?
c. How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating
joint process costs?
Complete this question by entering your answers in the tabs below.
Answer is complete but not entirely correct.
Required A Required B
What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?
Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign.
Realizable value
Allocation of joint cost
Reported profit
Required C
Chem-A
$ 188,200 $
22,032 X
$ 166,168 X S
Chem-B
41,350✔
39,168 X
2,182 X
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