Apples Galore, a local orchard, grows and sells apples and apple pies. At harvest time, apples are
Question:
Required:
A. Determine the net income for Apples Galore if all of the apples are sold at the split-off point.
B. Allocate the joint cost using the following methods:
1. Sales value at split-off point
2. Physical output
3. Net realizable value
C. What qualitative factors must be considered when deciding whether to sell seconds or make apple pies?
D. Historical records indicate that demand for pies at the local farmers markets totals 10,000 pies. Should Apples Galore sell seconds or make apple pies?
E. The local grocery stores are willing to sell Apples Galore pies for $15; however, they want a $2.50 commission per pie. Should Apples Galore sell pies through the grocery stores? What other factors must Apples Galore consider when making this decision?
Step by Step Answer:
Cost Management Measuring, Monitoring and Motivating Performance
ISBN: 978-1119185697
3rd Canadian edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang Hsuan Chen, Gail Cook