Rocky Mountain Company produces two products (X and Y) from ajoint process. Each product may be sold at the split-off point orprocessed further. Additional processing requires no specialfacilities, and production costs of further processing are entirelyvariable and traceable to the products involved. Jointmanufacturing costs for the year were $60,000. Sales values andcosts were as follows: If the joint production costs are allocatedbased on the physical-units method, the amount of joint costassigned to product X would be:If Processed Further Product UnitsMade Sale Value at Split-Off Sale Value Separable Cost X 9000 4000078000 10500 Y 6000 80000 90000 7500
Rocky Mountain Company produces two products (X and Y) from ajoint process. Each product may be sold at the split-off point orprocessed further. Additional processing requires no specialfacilities, and production costs of further processing are entirelyvariable and traceable to the products involved. Jointmanufacturing costs for the year were $60,000. Sales values andcosts were as follows: If the joint production costs are allocatedbased on the physical-units method, the amount of joint costassigned to product X would be:If Processed Further Product UnitsMade Sale Value at Split-Off Sale Value Separable Cost X 9000 4000078000 10500 Y 6000 80000 90000 7500
Related questions
WP Corporation produces products X, Y, and Z from a single rawmaterial input in a joint production process. Budgeted data for thenext month is as follows:
| Product X | Product Y | Product Z | ||||
| Units produced | 1,900 | 2,400 | 3,400 | |||
| Per unit sales value atsplit-off | $ | 14.00 | $ | 18.00 | $ | 19.00 |
| Added processing costs perunit | $ | 4.00 | $ | 6.00 | $ | 6.00 |
| Per unit sales value ifprocessed further | $ | 23.00 | $ | 23.00 | $ | 28.00 |
The cost of the joint raw material input is $82,000. Which ofthe products should be processed beyond the split-off point?
| Product X | Product Y | Product Z | |
| A) | yes | yes | no |
| B) | yes | no | yes |
| C) | no | yes | no |
| D) | no | yes | yes |
Multiple Choice
Jackson County Senior Services is a nonprofit organizationdevoted to providing essential services to seniors who live intheir own homes within the Jackson County area. Three services areprovided for seniorsâhome nursing, Meals On Wheels, andhousekeeping. Data on revenue and expenses for the past yearfollow:
| Total | Home Nursing | Meals On Wheels | House- keeping | |||||
| Revenues | $ | 919,000 | $ | 264,000 | $ | 402,000 | $ | 253,000 |
| Variable expenses | 468,000 | 114,000 | 199,000 | 155,000 | ||||
| Contribution margin | 451,000 | 150,000 | 203,000 | 98,000 | ||||
| Fixed expenses: | ||||||||
| Depreciation | 69,800 | 8,400 | 40,700 | 20,700 | ||||
| Liability insurance | 43,400 | 20,200 | 8,000 | 15,200 | ||||
| Program administratorsâ salaries | 116,000 | 40,400 | 38,800 | 36,800 | ||||
| General administrative overhead* | 183,800 | 52,800 | 80,400 | 50,600 | ||||
| Total fixed expenses | 413,000 | 121,800 | 167,900 | 123,300 | ||||
| Netoperating income (loss) | $ | 38,000 | $ | 28,200 | $ | 35,100 | $ | (25,300) |
| *Allocated onthe basis of program revenues. |
The head administrator of JacksonCounty Senior Services, Judith Miyama, is concerned about theorganizationâs finances and considers the net operating income of$38,000 last year to be too small. (Last yearâs results were verysimilar to the results for previous years and are representative ofwhat would be expected in the future.) Therefore, she has asked formore information about the financial advisability of discontinuingthe housekeeping program. |
The depreciation in housekeepingis for a van that transports housekeepers and their equipment fromjob to job. If the program were discontinued, the van would bedonated to a charitable organization. Depreciation charges assumezero salvage value. None of the general administrative overheadwould be avoided if the housekeeping program were dropped, but theliability insurance and the salary of the program administratorwould be avoided. |
| Required: |
| 1a. | What is the impact on net operating income by discontinuinghousekeeping program? (Input the amount as a positivevalue.) |
| (Click to select)DecreaseIncrease in net operatingincome by | $ |
| 1b. | Should thehousekeeping program be discontinued? | ||||
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| 2. | Would a segmented income statement format be more useful tomanagement in assessing the long-run financial viability of thevarious services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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