Adhesives Company makes three widely used industrial adhesives: A101, A204, and B216. Sales and production information for each of the three adhesives are showr in the following table. Most of Johnston's customers ask for a special blend of the three products which improves heat-resistance. The additional separable processing requires additional time anc materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro- duces only for specific customer orders, so there is no beginning or ending inventory. Assume als that all of Johnston's customers requested the heat-resistant version of the products so that all produc tion required additional separable processing. Total joint cost for the three products is $3,500,000. A101 A204 B216 115,000 175,000 2$ Gallons sold 135,000 14 10 12 Final sales price per gallon Price at split-off Separable processing cost 10 10 $550,000 $125,000 $625,000
Adhesives Company makes three widely used industrial adhesives: A101, A204, and B216. Sales and production information for each of the three adhesives are showr in the following table. Most of Johnston's customers ask for a special blend of the three products which improves heat-resistance. The additional separable processing requires additional time anc materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro- duces only for specific customer orders, so there is no beginning or ending inventory. Assume als that all of Johnston's customers requested the heat-resistant version of the products so that all produc tion required additional separable processing. Total joint cost for the three products is $3,500,000. A101 A204 B216 115,000 175,000 2$ Gallons sold 135,000 14 10 12 Final sales price per gallon Price at split-off Separable processing cost 10 10 $550,000 $125,000 $625,000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 17E
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Question
100%
![Joint Products
A101, A204, and B216. Sales and production information for each of the three adhesives are shown
in the following table. Most of Johnston's customers ask for a special blend of the three products,
which improves heat-resistance. The additional separable processing requires additional time and
materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro-
duces only for specific customer orders, so there is no beginning or ending inventory. Assume also
that all of Johnston's customers requested the heat-resistant version of the products so that all produc-
tion required additional separable processing. Total joint cost for the three products is $3,500,000.
Johnston Adhesives Company makes three widely used industrial adhesives:
A101
A204
B216
175,000
%$4
115,000
$.
Gallons sold
135,000
14
$4
10
12
Final sales price per gallon
Price at split-off
Separable processing cost
10
10
$550,000
$125,000
$625,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95e100c9-a0e8-40c0-9f58-bccf16814f16%2F1514d8a0-70c5-4ecf-96d1-7d24b05d5c1e%2Fvzplo7b_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Joint Products
A101, A204, and B216. Sales and production information for each of the three adhesives are shown
in the following table. Most of Johnston's customers ask for a special blend of the three products,
which improves heat-resistance. The additional separable processing requires additional time and
materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro-
duces only for specific customer orders, so there is no beginning or ending inventory. Assume also
that all of Johnston's customers requested the heat-resistant version of the products so that all produc-
tion required additional separable processing. Total joint cost for the three products is $3,500,000.
Johnston Adhesives Company makes three widely used industrial adhesives:
A101
A204
B216
175,000
%$4
115,000
$.
Gallons sold
135,000
14
$4
10
12
Final sales price per gallon
Price at split-off
Separable processing cost
10
10
$550,000
$125,000
$625,000
![2. Which of the four methods listed in requirement 1 do you think would be preferred in this case? Why?
1. Using four decimal points in your computations, calculate the unit product cost and total gross margin
value at split-off method, (c) the net realizable value method, and (d) the constant gross margin percent-
for each of the three product lines using the following methods: (a) physical measure method, (b) sales
Required
age method,](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95e100c9-a0e8-40c0-9f58-bccf16814f16%2F1514d8a0-70c5-4ecf-96d1-7d24b05d5c1e%2Fixjkbsi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Which of the four methods listed in requirement 1 do you think would be preferred in this case? Why?
1. Using four decimal points in your computations, calculate the unit product cost and total gross margin
value at split-off method, (c) the net realizable value method, and (d) the constant gross margin percent-
for each of the three product lines using the following methods: (a) physical measure method, (b) sales
Required
age method,
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