The Spokane Recycling Company (SRC) purchases old water and sodabottles and recycles them to produce plastic covers for outdoorfurniture. The company processes the bottles in a special piece ofequipment that first? melts, then reforms the plastic into largesheets that are cut to size. The edges from the cut pieces are soldfor use as package filler. The filler is considered a byproduct.SRC can produce 27 table? covers, 77 chair covers and 9 pounds ofpackage filler from 100 pounds of bottles.
In June, SRC had no beginning inventory. It purchased andprocessed 110,000 pounds of bottles at a cost of $ 880,000. SRCsold 22,000 table covers for $11 each, 77,000 chair covers for $12each, and 4,000 pounds of package filler at $0.90 per pound.
Requirement 1. Assume that SRC allocates the joint costs totable and chair covers using the sales value at splitoff method andaccounts for the byproduct using the production method. What is theending inventory cost for each product and gross margin forSRC?
?First, allocate the joint costs. ?(Round the weighting valuesto two decimal? places.)
| Table | Chair | |
| Covers | Covers | Total |
Sales values at splitoff | | | |
Weighting | | | |
Joint costs allocated | | | |
Now complete the statement below for SRC.
?(Do not round intermediary calculations. Only round the amountyou input in the cell to the nearest? dollar.)
| Table | Chair | |
| Covers | Covers | Total |
Revenues | | | |
Cost of goods sold: | | | |
Joint costs allocated | | | |
Less: Ending inventory | | | |
Cost of goods sold | | | |
Gross margin | | | |
Requirement 2. Assume that SRC allocates the joint costs totable and chair covers using the sales value at splitoff method andaccounts for the byproduct using the sales method. What is theending inventory cost for each product and gross margin forSRC?
?First, allocate the joint costs. ?(Round the weighting valuesto two decimal? places.)
| Table | Chair | |
| Covers | Covers | Total |
Sales values at splitoff | | | |
Weighting | | | |
Joint costs allocated | | | |
Now complete the statement below for SRC
?(If a box is not used in the? table, leave the box? empty; donot enter a zero. Do not round intermediary calculations. Onlyround the amount you input in the cell to the nearest? dollar.)
| Table | Chair | Plastic | |
| Covers | Covers | Filler (lbs) | Total |
Revenues | | | | |
Cost of goods sold: | | | | |
Joint costs allocated | | | | |
Less: Ending inventory | | | | |
Cost of goods sold | | | | |
Gross margin | | | | |
