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Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-40 (continued -2) The Reciprocal Method
7-51
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-52
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7.41 Departmental Cost Allocation; Insurance Company (40 min)
The Direct Method
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Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-41 (continued -1)
The Step Method (Information Technology First)
7-54
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-41 (continued -2)
The Step Method (Operations goes first)
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Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-56
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7.41 (continued -3)
The Reciprocal Method
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Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-42 Joint Products (35 min)
1. Sales Value Method
First calculate sales value at split off:
The allocation is as follows:
2. Physical Unit Method
Smooth Silken Total
Silken Skin’s amount of joint cost of each production run allocated on
a physical quantity basis is $168,000.
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Education.
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-42 (continued-1)
3. Net Realizable Value Method: (Additional processing costs of
$1.40 for Smooth Skin and $.90 for Silken Skin)
4. The amount of joint cost of each production run allocated to Smooth
Skin on the basis of physical quantity is $252,000, as calculated
above and in Part 2. The amount of additional processing cost does
not affect the calculations of the physical unit method.
7-59
Education.
Chapter 7 - Cost Allocation: Departments, Joint Products, and By-Products
7-43 Joint Product Costing (30 min)
1. $270,000
2. $160,714
3. $5.2636
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