Question

Instant Foods produces two types of microwavable products—beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices.

The production of ramen results in a waste product referred to as stock, which Instant dumps at negligible costs in a local drainage area.

In June 2012, the following data were reported for the production and sales of beef-flavored and shrimp-flavored ramen:

	Joint Cost	Beef	Shrimp
Joint Costs (cost of Noodles, spices, other inputs and processing to split off point)	$240,000
Beginning Inventory		0.00	0.00
Production (tons)		10,000	20,000
Sales (tons)		10,000	20,000
Selling price per ton		$10	$15

Due to the popularity of its microwavable products, Instant decides to add a new line of products that target dieters. These new products are produced by adding a special ingredients to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. The following is the monthly data for all the products:

	Joint Cost	Beef Ramen	Shrimp Ramen	Special B	Special S
Joint Costs (cost of Noodles, spices, other inputs and processing to split off point)	$240,000
Separable cost of processing 10,000 tons of Beef Roman into 12,000 tons of Special B				48,000
Separable cost of processing 20,000 tons of Shrimp Roman into 24,000 tons of Special S					$168,00
Beginning Inventory (tons)		0	0	0	0
Production (tons)		10,000	20,000	12,000	24,000
Sales (tons)				12,000	24,000
Selling price per ton		$10	$15	$18	$25

Required:

Calculate Instants’s Gross-margain percentage for Special B and Special S when joint cost are allocated using the following:

1. Sales Value at spilt off method
2. Physical measure method ( 3 Marks)
3. Net realizable value method

Please type in word in order for me to copy and paste.

Answer 1