batch 5 practice. term2

8/6/2019 Batch 5 Practice. Term2

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The processing of crude oil is necessaryThe processing of crude oil is necessarybefore its joint product, gasoline, motor oilbefore its joint product, gasoline, motor oil

and kerosene can be produced. Faisaland kerosene can be produced. FaisalPetroleum INC specializes in qualityPetroleum INC specializes in qualityproduct. During April the company usedproduct. During April the company used300000 gallons of crude oil at $0.30 per300000 gallons of crude oil at $0.30 per

gallon, paid $450000 in direct labor wagesgallon, paid $450000 in direct labor wagesand applied $360000 of factory overheadand applied $360000 of factory overheadto crude oil processing department.to crude oil processing department.


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Production during the period yieldedProduction during the period yielded90000 gallon of gasoline 40000 gallon of90000 gallon of gasoline 40000 gallon of

motor oil and 50000 gallon of kerosene.motor oil and 50000 gallon of kerosene.Selling prices of joint products are $0.6Selling prices of joint products are $0.6per gallon of gasoline, $0.85 per gallon ofper gallon of gasoline, $0.85 per gallon ofmotor oil and $0.18 per gallon ofmotor oil and $0.18 per gallon of

kerosene.kerosene.


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Required:Required:

11. Allocate the joint cost to the three. Allocate the joint cost to the three

products using the physical quantityproducts using the physical quantitymethod.method.

22. Allocate the cost using the gross market. Allocate the cost using the gross marketmethod.method.


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3. Gasoline can be processed further3. Gasoline can be processed furtherbeyond the splitbeyond the split--off point and becomeoff point and become

premium product. If the company incurredpremium product. If the company incurred$63000 of additional proceeding, the$63000 of additional proceeding, theselling price can be raised by $0.80 perselling price can be raised by $0.80 pergallon. Should the company process thegallon. Should the company process the

product after the split off point? Supportproduct after the split off point? Supportyour answer with a cost analysis.your answer with a cost analysis.


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Three different blends of chocolate sauceThree different blends of chocolate sauceare made by Smooth Toppings Company.are made by Smooth Toppings Company.T

he initial ingredients of all the threeT

he initial ingredients of all the threegrades of chocolate sauce are first blendgrades of chocolate sauce are first blendtogether. After this blending, othertogether. After this blending, otheringredients are added to produce separateingredients are added to produce separate

grades. The Extragrades. The Extra--Rich blend sells for $Rich blend sells for $44..22per liter, Quality blend sells for $per liter, Quality blend sells for $33..6060 andandthe Regular blend sells $the Regular blend sells $ 33..00 for liter.for liter.


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In July, 372000 liter of ingredients wasIn July, 372000 liter of ingredients wasput into production, with output asput into production, with output asfollows: 81840 liter of Extrafollows: 81840 liter of Extra--Rich, 148800Rich, 148800

liter of Quality blend and 141360ofliter of Quality blend and 141360ofRegular blend. Joint costs of productionRegular blend. Joint costs of productioninclude$301200 of materials, $246000 ofinclude$301200 of materials, $246000 ofdirect labor and $196800 of overhead.direct labor and $196800 of overhead.

Assume that there were no beginning andAssume that there were no beginning andending inventories and no loss of inputending inventories and no loss of inputduring production.during production.


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Required:Required: 11. Allocate the joint cost to the three products. Allocate the joint cost to the three products

using the physical quantity method.using the physical quantity method.

22. Allocate the cost using the gross market. Allocate the cost using the gross marketmethod.method. 33. Product A can be processed further beyond. Product A can be processed further beyond

the splitthe split--off point and become premiumoff point and become premiumproduct. If the company incurred $product. If the company incurred $1300013000 ofof

additional proceeding, the selling price can beadditional proceeding, the selling price can beraised by $raised by $00..5050 per unit. Should the companyper unit. Should the companyprocess the product after the split off point?process the product after the split off point?


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In the process of making paper, two distinct grades ofIn the process of making paper, two distinct grades ofwood pulp are used. Wicks Paper Products producedwood pulp are used. Wicks Paper Products produced4000040000liters of pulp during January. Direct material costliters of pulp during January. Direct material costis $is $8600086000, labor and overhead are $, labor and overhead are $5600056000 and $and $ 3600036000

respectively. Outputs for the month are as follows:respectively. Outputs for the month are as follows: Product Quantity Market valueProduct Quantity Market value

at split offat split off

Grade AGrade A 2400024000 $$ 1414..0000 perperliterliter

Grade BGrade B 1600016000 $$ 1010..5050 perperliterliter


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RequiredRequired

11. Allocate the cost using the quantity. Allocate the cost using the quantitymethodmethod

22. Allocate the cost using the gross market. Allocate the cost using the gross marketmethod.method.

33. If the company is considering the. If the company is considering the

processing of grade A at an extra cost of $processing of grade A at an extra cost of $1200012000, the product will sell at $, the product will sell at $1515.Should.Shouldthe company process the product further?the company process the product further?


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During the fourth quarter ofDuring the fourth quarter of 20052005 Sarrah company plansSarrah company plansto manufacture the following metal boxesto manufacture the following metal boxes

OctoberOctober 300300 boxbox

NovemberNovember 500500 boxbox

DecemberDecember 700700 boxbox

Each box requiresEach box requires 150150 pounds of steel, which cost $pounds of steel, which cost $22..5050per pound. On the first of Octoberper pound. On the first of October 20052005 there arethere are 10001000pounds of steel on hand. The company wants to have apounds of steel on hand. The company wants to have a

minimum ofminimum of 12001200,, 14001400 andand 15001500 pound at the end ofpound at the end ofthe three month respectively. Determine the rawthe three month respectively. Determine the rawmaterial purchase in each month of the last quarter ofmaterial purchase in each month of the last quarter of20052005..


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OctoberOctober

Production needsProduction needs 300300xx150150== 4500045000

+desired ending inventory=+desired ending inventory= 12001200 Total needs=Total needs=4620046200

-- beginning inventory=beginning inventory=10001000

Purchases=Purchases= 4520045200 Cost of purchases=Cost of purchases= 4520045200xx22..55== 113000113000


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NovemberNovember

Production needsProduction needs 500500xx150150== 7500075000

+desired ending inventory=+desired ending inventory= 14001400 Total needs=Total needs=7620076200

-- beginning inventory=beginning inventory=12001200

Purchases=Purchases= 7520075200 Cost of purchases=Cost of purchases= 7520075200xx22..55==188000188000


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DecemberDecember

Production needs 700x150= 105000Production needs 700x150= 105000

+desired ending inventory= 1500+desired ending inventory= 1500 Total needs=106500Total needs=106500

-- beginning inventory=1400beginning inventory=1400

Purchases= 106100Purchases= 106100 Cost of purchases= 105100x2.5= 262750Cost of purchases= 105100x2.5= 262750


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ABC Company has the following standardABC Company has the following standardcosts of each unit in finished goodscosts of each unit in finished goods

Finished goodsFinished goods

Material A $8Material A $8 Material B 12Material B 12

The standard cost of material A is $1.6 perThe standard cost of material A is $1.6 per

pound and $2 for material B.pound and $2 for material B.


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Management expects to sellManagement expects to sell 1000010000 unitsunitsof finished products . Beginning inventoryof finished products . Beginning inventoryof finished goods consists ofof finished goods consists of 800800 units,units,

Material AMaterial A-- 18001800 pounds and Material Bpounds and Material B --25002500 pounds. Desired ending inventory ispounds. Desired ending inventory isfinished goodsfinished goods-- 16001600 units, Material Aunits, Material A--22002200 pound and Material Bpound and Material B 36003600 pounds.pounds.

What are the companyWhat are the companys purchases fors purchases foreach material?each material?


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The amount of material A in each unit=The amount of material A in each unit=88//11..66== 55 lblb

The amount of material B in each unit=The amount of material B in each unit=1212//22== 66lblb

The number of units to be produced=The number of units to be produced=sales+ Desired endingsales+ Desired ending-- beginningbeginninginventoryinventory

1000010000 ++16001600-- 800800== 1080010800 unitunit


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Material AMaterial A

Production needs(Production needs(1080010800xx55)) 5400054000

+desired ending+desired ending 22002200 --Beginning inventoryBeginning inventory 18001800

PurchasesPurchases 5440054400

Cost =Cost =5440054400xx11..66== 8704087040


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Material BMaterial B

Production needs (Production needs (1080010800xx66)) 6480064800

+desired ending+desired ending 36003600 Beginning inventoryBeginning inventory 25002500

PurchasesPurchases 6590065900

CostCost 6590065900xx22 == 131800131800


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ABC Company manufactures products X, YABC Company manufactures products X, Yand Z. each product required differentand Z. each product required differentquantities of input. Planned unitquantities of input. Planned unitproduction of each product inproduction of each product in 20072007;; 10001000units for X,units for X, 20002000 for Y andfor Y and 30003000 for Z. thefor Z. thedirect material for each product aredirect material for each product are


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Unit material requirementUnit material requirement

Product AProduct A BB CC DD

XX 11 11 1 21 2YY 11 22 22 11

ZZ 11 11 22 22


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Beginning and desired ending inventory as well as unitBeginning and desired ending inventory as well as unitcosts for each direct material is as follows:costs for each direct material is as follows:

unitsunits AA BB CC DD

End.End.20092009 20002000 50005000 3000 10003000 1000

BegBeg20092009 80008000 10001000 60006000 30003000

Unit costUnit cost 22 33 55 44

Required: allocate a direct material purchases forRequired: allocate a direct material purchases for 20092009


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ABC Company manufactures products X, YABC Company manufactures products X, Yand Z. each product required differentand Z. each product required differentquantities of input. Planned unitquantities of input. Planned unitproduction of each product inproduction of each product in 20012001 isis1000010000 units for X,units for X, 2000020000 for Y andfor Y and 3000030000for Z. the direct material for each productfor Z. the direct material for each product

areare


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Unit material requirementUnit material requirement

Product AProduct A BB CC DD

XX 33 22 2 12 1 YY 11 33 11 33

ZZ 22 11 11 33

Beginning and desired ending inventory asBeginning and desired ending inventory aswell as unit costs for eachwell as unit costs for each


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direct material is as follows:direct material is as follows:

unitsunits AA BB CC DD

11.. 11..2001 100002001 10000 80008000 40004000 20002000

3131..1212..2001 120002001 12000 60006000 50005000 22002200

unit cost $unit cost $ 44 22 33 44

Required: What is the amount of materialsRequired: What is the amount of materialsneeded to be purchasedneeded to be purchased


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Alicia Company has the following standard costsAlicia Company has the following standard costsof each unit in finished goodsof each unit in finished goods

Finished goodsFinished goods Material x $Material x $1212

Material yMaterial y 1515

Direct laborDirect labor 1818

Factory OverheadFactory Overhead 1515

The standard cost of material x is $The standard cost of material x is $44 per poundper poundand $and $33 for material y. Alicia pays direct laborfor material y. Alicia pays direct laborworker $worker $55 per hour.per hour.


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The company is sellThe company is sell 1100011000 units of finishedunits of finishedproducts inproducts in 20042004. Beginning inventory of. Beginning inventory offinished goods consists offinished goods consists of 900900 units, Material xunits, Material x--

18501850 pounds and Material ypounds and Material y --24502450 pounds.pounds.Desired ending inventory is finished goodsDesired ending inventory is finished goods-- 15001500units, Material xunits, Material x-- 21502150 pound and Material ypound and Material y36503650 pounds.pounds.

Required: calculate the direct materialRequired: calculate the direct materialpurchases.purchases.

batch 5 practice. term2

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