Joint Cost Allocation: Elsie Dairy Products Corp
Not what you're looking for?
Elsie Dairy Products Corp. buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk Elsie produces three cups of butter and nine cups of buttermilk. During May 2010, Elsie bought 12,000 gallons of milk for $22,250. Elsie spent another $9,430 on the churning process to separate the milk into butter and buttermilk. Butter could be sold immediately for $2.20 per pound and buttermilk could be sold immediately for $1.20 per quart (note: two cups = one pound; four cups = one quart).
Elsie chooses to process the butter further into spreadable butter by mixing it with canola oil, incurring an additional cost of $1.60 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $2.30.
Required
1. Allocate the $31,680 joint cost to the spreadable butter and the buttermilk using the following (show work):
a) Physical-measure method (using cups) of joint cost allocation
b) Sales value at splitoff method of joint cost allocation
c) NRV method of joint cost allocation
d) Constant gross margin percentage NRV method of joint cost allocation
Purchase this Solution
Solution Summary
Your tutorial is in excel, attached. Click in cells to see computations. Instructional notes are left for you.
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.