50.1K

Verified Solution

Link Copied!

Lovely Lotion Inc. produces three different lotions: hand, body, and foot. The lotions are produced jointly in a mixing process that costs a total of $$250$ per batch. At the split$-$off point, one batch produces $80,40,$ and $25$ bottles of hand, body, and foot lotion, respectively. After the split$-$off point, hand lotion is sold immediately for $$2\mathrm{.}50$ per bottle. Body lotion is processed further at an additional cost of $$0\mathrm{.}25$ per bottle and then sold for $$5\mathrm{.}75$ per bottle. Foot lotion is processed further at an additional cost of $$0\mathrm{.}85$ per bottle and then sold for $$4\mathrm{.}00$ per bottle. Assume that body and foot lotion could be sold at the split$-$off point for $$3\mathrm{.}00$ and $$3\mathrm{.}20$ per bottle, respectively.

$1.$ Using the market value at split$-$off method, allocate the joint costs of production to each product. Round your answers to two decimal places.

Joint Product Bottles

per Batch Market Value

per Bottle at

Split$-$Off Total Market

Value at

Split$-$Off Percent of

Total MV at

Split$-$Off Joint Costs Allocation

Hand lotion fill in the blank $1$

$fill in the blank $2$

$fill in the blank $3$

fill in the blank $4$

$\%$ $fill in the blank $5$

$fill in the blank $6$

Body lotion fill in the blank $7$

fill in the blank $8$

fill in the blank $9$

fill in the blank $10$

$\%$ fill in the blank $11$

fill in the blank $12$

Foot lotion fill in the blank $13$

fill in the blank $14$

fill in the blank $15$

fill in the blank $16$

$\%$ fill in the blank $17$

fill in the blank $18$

Totals fill in the blank $19$

$fill in the blank $20$

$fill in the blank $21$

$2.$ Based on the information provided, should Lovely Lotion Inc. continue processing body and foot lotion after the split$-$off point?

Body lotion

Foot lotion

$3.$ Allocate the joint costs of production to each product using the net realizable value method. Round your answers to two decimal places.

Joint Product Bottles

per Batch Market Value

per Bottle at

Split$-$Off Total Market

Value at

Split$-$Off Market Price

per Bottle Added Cost

per Bottle NRV

per Bottle Total Net

Realizable

Value Greater of

Total NRV

and Total

Market Value

at Split$-$Off Proportion Joint

Costs Allocation

Hand lotion fill in the blank $24$

$fill in the blank $25$

$fill in the blank $26$

$fill in the blank $27$

$fill in the blank $28$

$fill in the blank $29$

$fill in the blank $30$

$fill in the blank $31$

fill in the blank $32$

$\%$ $fill in the blank $33$

$fill in the blank $34$

Body lotion fill in the blank $35$

fill in the blank $36$

fill in the blank $37$

fill in the blank $38$

fill in the blank $39$

fill in the blank $40$

fill in the blank $41$

fill in the blank $42$

fill in the blank $43$

$\%$ fill in the blank $44$

fill in the blank $45$

Foot lotion fill in the blank $46$

fill in the blank $47$

fill in the blank $48$

fill in the blank $49$

fill in the blank $50$

fill in the blank $51$

fill in the blank $52$

fill in the blank $53$

fill in the blank $54$

$\%$ fill in the blank $55$

fill in the blank $56$

Totals fill in the blank $57$

$fill in the blank $58$

$fill in the blank $59$

$fill in the blank $60$

Answer & Explanation Solved by verified expert

See Answer