Exercise 11-18 Name:
Insert your answers in the gray-shaded cells of columns B, C, and E. Enter
formulas where appropriate. If an answer is incorrect, the word “wrong” will
appear.
a. Units of output allocation:
Total bottles 80,000
Perfume 270,000$
Eau de Toilet 432,000
Body Splash 378,000
Total 1,080,000$
Weight-based allocation:
Total weight (ounces) 168,000
Perfume 129,600$
Eau de Toilet 410,400
Body Splash 540,000
Total 1,080,000$
Approximated net realizable value computation:
Amount Percent
Perfume 280,000$ 30%
Eau de Toilet 368,000 40%
Body Splash 280,000 30%
Total 928,000$ 100%
Approximated net realizable value allocation:
Perfume 324,000$
Eau de Toilet 432,000
Body Splash 324,000
Total 1,080,000$
b. Cost assigned to inventory
Perfume 320,000$
Eau de Toilet 480,000
Body Splash 434,000
Total 1,234,000$
Ending inventory valuation based on bottles of output:
Solution
Perfume 9,600$
Eau de Toilet 24,000
Body Splash 26,040
Total 59,640$
Inventory valuation based on weight:
Perfume 5,388$
Eau de Toilet 22,912
Body Splash 35,784
Total 64,084$
Inventory valuation based on approximated net realizable value:
Perfume 11,220$
Eau de Toilet 24,000
Body Splash 22,781
Total 58,001$
c.
Relative to all of the products, once the joint cost is assigned and a cost per
ounce is computed, it appears that The Scent of Money is not selling any of its
products at high enough prices. Per unit of product, losses of $2.20 is being
generated on the sale of each bottle of perfume, $2.00 per bottle of eau de
toilette, and $1.56 per bottle of body splash.