Question

The processes of tomatoes in catsup, tomato juice, and canned tomatoes. The joint costs of processing...

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.

Homework Answers

Answer #1

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

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