Ex 16-23 (same)

15e: Ex 16-18

Syrup Starch Total

Final sales value of total production
13,000x$51; 5,900x$26 663,000 153,400 816,400
Deduct separable costs 406,340 97,060 503,400
NRV at splitof 256,660 56,340 313,000
82% 18%
joint costs allocated 269,780 59,220 329,000
Ex 16-24 (same)
15e: Ex 16-19

1.
methanol turpentine total
physical units (gallons) 2,500 7,500 10,000
25% 75%
joint costs allocated 30,000 90,000 120,000

2.

methanol turpentine total

final sales value of total production 52,500 105,000 157,500
separable costs 7,500 15,000 22,500
NRV at splitof 45,000 90,000 135,000
33% 67%
joint costs allocated 40,000 80,000 120,000

3.
a) physical units (gallons):
methanol turpentine total
revenues 52,500 105,000 157,500
joint costs 30,000 90,000 120,000
separable costs 7,500 15,000 22,500
cogs 37,500 105,000 142,500
gross margin 15,000 0 15,000
%rev 28.6% 0.0% 9.5%
b) NRV

methanol turpentine total

revenues 52,500 105,000 157,500
joint costs 40,000 80,000 120,000
separable costs 7,500 15,000 22,500
cogs 47,500 95,000 142,500
gross margin 5,000 10,000 15,000
%rev 9.5% 9.5% 9.5%

4.

an incremental approach demonstrates that the company should use the new process:

incremental revenue ($60-$21) x 2500 97,500

incremental costs
further processing $9 x 2500 22,500
tax (0,2 x $60) x 2500 30,000 52,500
incremental operating revenue 45,000

proof: beb turp total

total revenues 150,000 105,000 255,000
joint costs 60,000 60,000 120,000
separable costs 60,000 15,000 75,000
cogs 120,000 75,000 195,000
new gross margin 30,000 30,000 60,000
old gross margin 5,000 10,000 15,000
gross mg change 25,000 20,000 45,000

alc bev turpentine total

revenues 150,000 105,000 255,000
separable costs 60,000 15,000 75,000
NRV 90,000 90,000 180,000
50% 50%
joint costs allocated 60,000 60,000 120,000
Ex 16-33 (same)
15e: Ex 16-28

1.

a) sales value at splitof

sales value of total

production at splitof allocation of joint costs
A 75,000 30% 31,500
B 62,500 25% 26,250
C 45,000 18% 18,900
D 67,500 27% 28,350
250,000 100% 105,000

Super A Super B C Super D Total

revenues 375,000 150,000 45,000 75,000 645,000
joint costs 31,500 26,250 18,900 28,350 105,000
separable costs 240,000 60,000 0 45,000 345,000
cogs 271,500 86,250 18,900 73,350 450,000
gross margin 103,500 63,750 26,100 1,650 195,000
%rev 27.6% 42.5% 58.0% 2.2% 30.2%

b) physical units

sales value of total

production at splitof allocation of joint costs
A 275,000 55% 57,750
B 100,000 20% 21,000
C 75,000 15% 15,750
D 50,000 10% 10,500
500,000 100% 105,000

Super A Super B C Super D Total

revenues 375,000 150,000 45,000 75,000 645,000
joint costs 57,750 21,000 15,750 10,500 105,000
separable costs 240,000 60,000 0 45,000 345,000
cogs 297,750 81,000 15,750 55,500 450,000
gross margin 77,250 69,000 29,250 19,500 195,000
%rev 20.60% 46.00% 65.00% 26.00% 30.23%

c) NRV

final sales value of

total production separable costs NRV at splitof allocation of joint costs
Super A 375,000 240,000 135,000 45% 47,250
Super B 150,000 60,000 90,000 30% 31,500
C 45,000 0 45,000 15% 15,750
Super D 75,000 45,000 30,000 10% 10,500
300,000 100% 105,000

Super A Super B C Super D Total

revenues 375,000 150,000 45,000 75,000 645,000
joint costs 47,250 31,500 15,750 10,500 105,000
separable costs 240,000 60,000 0 45,000 345,000
cogs 287,250 91,500 15,750 55,500 450,000
gross margin 87,750 58,500 29,250 19,500 195,000
%rev 23.40% 39.00% 65.00% 26.00% 30.23%

summary of gross margin %:

methods Super A Super B C Super D total

a) sales value at splitof 27.6% 42.5% 58.0% 2.2% 30.2%
b) physical units 20.6% 46.0% 65.0% 26.0% 30.2%
c) NRV 23.4% 39.0% 65.0% 26.0% 30.2%

2. further processing of X into super X

A
incremental revenue $375,000-$75,000 300,000
incremental costs 240,000
incremental operating income from further processing 60,000

B
incremental revenue $150,000-$62,500 87,500
incremental costs 60,000
incremental operating income from further processing 27,500

D
incremental revenue $75,000-$67,500 7,500
incremental costs 45,000
incremental operating income from further processing -37,500
Operating income can be increased by $37,500 if Product D is sold at its splitof point rather than processing it further into Super D.

total incremental operating income from further processing 50,000