Service Department Cost Allocation - Anna Lee

More documents

Recommendations

Info

By-products – Method 2Carlyle Coal CompanyFor the Month of MarchHi-GradeLo-GradeDustTotalSales valueLess: Additional processing costsNet realizable value at split-off pointAllocated joint costs aGross marginGross margin as a percent of sales$300,000-0-$300,000108,000 b$192,00064%$450,000-0-$450,000162,000 c$288,00064%$15,000-0-$15,000-0-$15,000100%$765,000-0-$765,000270,000$495,00065%aJoint costs adjusted for sales value of by-product (dust)b($300,000 ÷ $750,000) or 40% × $270,000 joint cost = 108,000. 15,000 is not deductedfrom joint cost, instead, it is reported as other income.c($450,000 ÷ $750,000) or 60% × $270,000 = 162,00011 - 32
Sell or Process Further• Suppose CCC can sell Lo-grade coal for $450,000at the split-off point or process it further to makemid-grade coal.• Mid-grade coal would sell for $550,000 andadditional processing costs would be $50,000.Additional revenue: $100,000?Additional cost: $ 50,00011 - 33
Page 2: LO1Service Department Cost Allocati
Page 5 and 6: Cost Allocation: Direct Method• D
Page 7 and 8: Cost Allocation: Step Method• The
Page 9 and 10: LO3Cost Allocation: Step MethodServ
Page 11 and 12: Cost Allocation: Reciprocal Method
Page 13 and 14: LO4Cost Allocation: Reciprocal Meth
Page 19 and 20: LO5The Reciprocal Methodand Decisio
Page 21 and 22: Allocation of Joint CostsJoint cost
Page 23 and 24: Net Realizable Value MethodFinal sa
Page 25 and 26: Estimating NRV• When no sales val
Page 27 and 28: Physical Quantities Method• Joint
Page 29 and 30: By-products• By-products are outp
Page 31: Carlyle Coal CompanyFor the Month o

Service Department Cost Allocation - Anna Lee

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?