Question

Quality?, Inc. is a producer of potato chips. A single production process at Quality?, ?Inc., yields...

Quality?, Inc. is a producer of potato chips. A single production process at Quality?, ?Inc., yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are fully processed by the splitoff? point, and there are no separable costs. For September 2014?, the cost of operations is $ 525 comma 000. Production and sales data are as? follows:

Production (in pounds)
Sales (in pounds)
Selling Price per Pound
Main Product:
Potato Chips
42,000
32,760
$26
Byproduct
8,400
7,500
$5
There were no beginning inventories on September? 1,
20142014.
Requirements
1.
What is the gross margin for
QualityQuality?,
?Inc., under the production method and the sales method of byproduct?accounting?
2.
What are the inventory costs reported in the balance sheet on September? 30,
20142014?,
for the main product and byproduct under the two methods of byproduct accounting in requirement? 1?

Homework Answers

Answer #1

solution:

     

PARTICULARS PRODUCTION METHOD notes SALES METHOD notes
SALES REVENUE :
MAIN PRODUCT 851760 32760*26 851760 32760*26
BY PRODUCT 0 37500 7500*5
TOTAL REVENUE 851760 889260 851760+37500
COST OF GOODS SOLD
OPERATION COST 525000 525000
LESS: NET REALISABLE VALUE OF BY PRODUCT 42000 8400*5 - -
NET OPERATION COSTS 483000 525000
LESS : MAIN PRODUCT INVENTORY COST 106260 [(42000-32760)/42000] * 483000 115500 [(42000-32760)/42000] * 525000
NET COST OF GOODS SOLD 376740 409500

GROSS MARGIN = TOTAL SALES REVENUE-NET COST OF GOODS SOLD

1) GROSS MARGIN UNDER PRODUCTION METHOD = 851760-376740 =475020

GROSS MARGIN UNDER SALES METHOD = 851760-409500=442260

2) INVENTORY COST UNDER PRODUCTION METHOD = MAIN INVENTORY COST + BYPRODUCT INVENTORY COST AT UNREALISABLE SALE VALUE

=106260+(8400-7500)*5 = 106260+4500=110760

INVENTORY COST UNDER SALES METHOD = 115500

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Radford Inc. manufactures a sugar product by a continuous process, involving three production departments-Refining, Sifting, and...
Radford Inc. manufactures a sugar product by a continuous process, involving three production departments-Refining, Sifting, and Packing. Assume that records indicate that direct materials, direct labor, and applied factory overhead for the first department, Refining, were $385,000, $143,000, and $99,000, respectively. Also, work in process in the Refining Department at the beginning of the period totaled $29,600, and work in process at the end of the period totaled $29,800. Required: a. (1) On September 30, journalize the entry to record...
Orange County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are...
Orange County Chrome Company manufactures three chrome-plated products—automobile bumpers, valve covers, and wheels. These products are manufactured in two production departments (Stamping and Plating). The factory overhead for Orange County Chrome is $213,389. The three products consume both machine hours and direct labor hours in the two production departments as follows: Direct Labor Hours Machine Hours Stamping Department Automobile bumpers 558 803 Valve covers 295 557 Wheels 340 597 1,193 1,957 Plating Department Automobile bumpers 171 1,166 Valve covers 175...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 18 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $111,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Cost Driver Pool Rates Quantity of Driver for Satin Sheen Incoming material...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT