# Managerial Accounting

Given:

SyrupSugarTotal

Units produced20,0001,00021,000

Unit selling price$15.00$2.00

Total process costs:

After split-off$12,000$280$12,280

Joint costs$100,000

a.Calculate the cost of the syrup if the sugar is considered a by-product and the gross margin from its sale is considered to be a reduction of syrup costs. ProductsSales ValueCosts beyond split-offDifferenceJoint costs allocation Syrup$300,00012,000288,000$99,406

Sugar$2,0002801,720$594

$289,720

Calculation:

288,000x100,000=99,406

289,720

1,720x100,000=594

289,720

SyrupSugar

Joint costs99,406/20,000 =$4.97594/1,000 =$0.59

Costs beyond split-off12,000/20,000 =$0.6280/1,000 =$0.28 Unit Cost$5.57$0.87

a.Answer: The cost of syrup is $4.70/unit if the sugar is considered a by-product and the gross margin from its sale is considered to be a reduction of syrup costs. b.Calculate product costs assuming this company decided to make and sell as much maple sugar as possible after filling all syrup orders (i.e., it regarded syrup and sugar as joint products). Use the sales value method.

ProductsSales ValueCosts beyond split-offDifferenceJoint costs allocation Syrup$300,00012,000288,000$99,406

Sugar$2,0002801,720$594

$289,720

Calculation:

288,000x100,000=99,406

289,720

1,720x100,000=594

289,720

Syrup ProductionSugar Production

Joint costs99,406594

Costs beyond split-off12,000280

Production Cost$111,406$874

TOTAL PRODUCTION COST$112,280

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