50.1K

Verified Solution

Link Copied!

Scroll down to complete all parts of this task.

Based on the information given for Bistric, allocate the joint processing costs of $800,000 to each of the three product lines by entering the appropriate amounts in the associated cells. Round interim calculations of the percentages to the nearest hundredth percent and enter final answers as positive whole amounts.

Determine the allocated costs using the relative sales value method at split-off.

Product	Allocated cost
1. Paper towels
2. Pencil casings
3. Cups

Determine the allocated costs using the physical volume value method at split-off.

Product	Allocated cost
4. Paper towels
5. Pencil casings
6. Cups

Determine the allocated costs using the estimated net realizable value method at split-off.

Product	Allocated cost
7. Paper towels
8. Pencil casings
9. Cups

Reporter: Thanks, Tom. Im standing here with one of the towns most prestigious business owners, Jim Jensen, owner of Bistric, Inc. How are you doing today, Jim?

Jim: Im just fine. Thank you for having me on.

Reporter: Thank you for joining us. Why dont you tell the folks at home a little bit about Bistric?

Jim: Bistric, Inc., was started by my grandfather about 50 years ago. At first, it was only my grandfather and my grandmother. It was a small time lumber mill. Eventually, their children began helping out on the weekends and soon enough were working full time. As the business began to grow, this led to family friends working there and helping to grow the business.

Reporter: It sounds like you have really encapsulated a family atmosphere over at Bistric.

Jim: Absolutely. It is something that we take great pride in.

Reporter: So you mentioned that, at one point, Bistric was a small, family owned lumber mill. Is that still the case?

Jim: Well, it is still family owned, but it can hardly be called a lumber mill or small. Today, we focus our efforts on making products from lumber. Currently, we purchase the trees from a lumber yard and process them into one of three products: paper towels, pencil casings, or cups.

Reporter: How interesting! Perhaps you could show us some of your products when we come back from a quick break?

Jim: I would love to.

Reporter: Well be right back.

To: Victor Ott, Production Supervisor From: Alex Smith, VP of Production Date: October 16, Year 1 RE: Protocol for New Production Staff

Hello Victor,

We have several new members that will be joining our production team next week. I am confident that each of the new hires will help us achieve greater efficiency. However, although they are competent, a majority of the new employees have never worked in a production facility before, so I will need you to help establish and enforce some standard production protocols.

As you are well aware, our three products are the result of a joint process that involves the following four steps:

1. Grinding woodchips to separate fibers (known as mechanical pulping)
2. Cooking woodchips to remove lignin (known as chemical pulping)
3. Washing the fibers (cleaning)
4. Spreading color onto the surface (coating)

I will need you to establish a written set of safety procedures and operational protocol for each of these four steps. Because the new members start next week, I am asking that you have this completed by the end of this week at the latest. Let me know if you have any questions.

Sincerely, Alex

Reporter: Welcome back, Im here with Jim Jensen, owner of Bistric, Inc. He was just about to show us some of his products. Go ahead, Jim.

Jim: Ive brought one of each item today: a roll of our premium paper towels, one of our prestigious pencil casings, and last but not least, a fantastic wooden cup.

Reporter: Those are all truly amazing. Now, I know you gave a brief rundown of the production process before we took our break, but could you tell us a little more about the production process?

Jim: Gladly. Well, we prefer to keep our major steps internal for competitive reasons, but I will say that the paper towels are sold after being coated without further processing by us. Also, the cups do not require any further processing.

Reporter: What about the pencil casings?

Jim: Im glad you asked. The pencil casings must be further sized. The additional processing costs us $4,000 per month and, unfortunately, normally results in a loss of 10% of the units entering the process. However, we are able to sell any unfinished casings in an active intermediate market for $1.50 per unit.

Reporter: Wow, isnt that interesting? Well, thank you very much for coming in today, Jim. We appreciated having you and thank you for showing us your products.

Jim: No problem. Thank you all for having me.

To: John Bedford, Staff Accountant From: Sammie Green, Accounting Manager Date: October 19, Year 1 RE: Cost Allocation

Dear John,

I just got off the phone with the Board of Directors. They are considering making a change in the manner in which we allocate the joint processing costs incurred in production. The Board asked me to determine the appropriate allocated cost for each of the three products under three separate scenarios. Unfortunately, I will not have time to do this before I leave for my 2-week vacation later this evening. I will need you to do these for me and have them done and turned in to the Board before the end of the week. Call me if you have any questions or concerns.

Best of luck, Sammie

Product

Monthly Output

Fully Processed Sales Price

Paper Towels

90,000

$1

Pencil Casings

6,000

3

Cups

24,000

5

Answer & Explanation Solved by verified expert

See Answer