Chemical Processors Use a Joint Process to Produce Two Types

question 126

Essay

Chemical Processors use a joint process to produce two types of base paint, Regular and Premium. Joint costs amount to $60,000 per batch of output. Each batch totals 12,000 litres, 60% Regular and 40% Premium. Both products are processed further without gain or loss in volume. Data about further processing are as follows:
Selling Price
Separable Costs After Further Processing
Regular $1.00 per litre $15.00 per litre
Premium $3.00 per litre $20.00 per litre
a)Allocate the joint costs according to the physical output method (number of litres at the split-off point).
b)Allocate the joint costs according to the net realizable value method.
c)The Company has discovered an additional process by which the Regular can be made into a high quality stain and mildew-proof paint called Durable. This paint is especially suited for bathrooms and kitchens. The new selling price would be $28 per litre. Additional processing would increase separable costs by $11.00 (in addition to the $1.00 separable cost required to produce regular). Assuming no other changes in cost, should the company begin producing Durable? Provide calculations to support your answer.
d)Identify a qualitative factor that could affect the decision in part (c).

Recognize the importance of social, psychological, and physical activities to promote well-being in older adults.

Understand the role of the nurse and other healthcare professionals in ensuring the safety and well-being of older adults under their care.

Learn the principles of effective communication and therapeutic interaction with older adults.

Understand the definition and implications of ageism within the healthcare sector.

---

Definitions:

Adjusted Trial Balance

is a listing of all company accounts that will appear on the financial statements after making end-of-period adjustments.

Reversing Entry

An accounting entry made at the beginning of an accounting period to reverse or cancel out a previous adjusting entry.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.

Net Income

The amount of profit that remains after all operating expenses, interest, taxes, and dividends have been subtracted from total revenues.