Question

7.   Chicago Milling buys oats at $0.70 per pound and produces CPM Oat? Flour, CPM Oat? Flakes, and CPM

Oat Bran. The process of separating the oats into oat flour and oat bran costs $0.30 per pound. The oat flour can be sold for $1.00 per? pound, the oat bran for $2.00 per pound. Each pound of oats has 0.25 pounds of oat bran and 0.75 pounds of oat flour. A pound of oat flour can be made into oat flakes for a fixed cost of $285,000 plus a variable cost of $0.60 per pound. Chicago Milling plans to process eight hundred eighty thousand pounds of oats in? 20X0, at a purchase price of $616,000.

1.	Allocate all the joint costs to oat flour and oat bran using the? physical-units method.
2.	Allocate all the joint costs to oat flour and oat bran using the? relative-sales-value method.
3.	Suppose there were no market for oat flour.? Instead, it must be made into oat flakes to be sold. Oat flakes sell for $3.00 per pound. Allocate the joint cost to oat bran and oat flakes using the? relative-sales-value method.

Answer 1