The processes of tomatoes in catsup, tomato juice, and canned tomatoes. The joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories. Production and sales value information are as follow:
Product | Cases | Additional Cost | Selling Price |
Ketchup | 100,000 | $3.00 per case | $28 per case |
Juice | 150,000 | $5.00 per case | $25 per case |
Canned | 200,000 | $2.50 per case | $10 per case |
Required:
A. Determine the amount allocated to each product if the estimated net realizable value method is used.
B. Determine the amount allocated to each product if the physical units method is used.
A.
Ketchup | Juice | Canned | Total | |
Sales Value | $ 2,800,000 | $ 3,750,000 | $ 2,000,000 | $ 8,550,000 |
Separable Costs | $ 300,000 | $ 750,000 | $ 500,000 | $ 1,550,000 |
NRV | $ 2,500,000 | $ 3,000,000 | $ 1,500,000 | $ 7,000,000 |
Joint Cost Allocation | $ 150,000 | $ 180,000 | $ 90,000 | $ 420,000 |
B.
Ketchup = $420000 / 450000 x 100000 = $93333
Juice = $420000 / 450000 x 150000 = $140000
Canned = $420000 / 450000 x 200000 = $186667
Get Answers For Free
Most questions answered within 1 hours.