Question 1 Sagbeug Consider the following information. Each day a butcher buys a 200 kg pig...
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Question 1 Sagbeug Consider the following information. Each day a butcher buys a 200 kg pig for R3 000. The pig can be processed to yield the following three products: Pork chops Bacon Ham Selling price per kg R40 Weight (kg) 30 R30 50 R12 120 200 Day 1: The butcher buys a pig. The R3 000 joint cost of the pig is allocated to individual products based on the relative weights of the products. Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops R40 30 R1 200 R450 R750 Bacon R30 50 R1 500 R750 R750 Ham R12 120 R1 440 R1800 (R360) R4 140 R3 000 R1 140 Day 2: The butcher buys an identical pig and throws out the ham because the previous day's analysis showed that it lost money. She now has 80 kgs of "good output". Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops Bacon R40 R30 30 R1 200 R1 125 R75 50 R1 500 R1 875 (R375) R2 700 R3 000 (R300) Day 3: The butcher buys an identical pig and throws out the ham and the bacon because the previous days' analyses showed that they lost money. She now has 30 kgs of "good output". Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops R40 30 R1 200 R3 000 (R1 800) R1 200 R3 000 (R1 800) Day 4: The butcher buys an identical pig and throws out the whole pig because the previous days' analyses showed that it lost money. Therefore, she lost R3 000. Required: 1.1 1.2 How could the joint costs be allocated to all three products using the sales value at split-off method? Should the operating income numbers for requirement 1.1 above be used to determine if the butcher is better off selling or not selling individual products? Briefly explain. Question 1 Sagbeug Consider the following information. Each day a butcher buys a 200 kg pig for R3 000. The pig can be processed to yield the following three products: Pork chops Bacon Ham Selling price per kg R40 Weight (kg) 30 R30 50 R12 120 200 Day 1: The butcher buys a pig. The R3 000 joint cost of the pig is allocated to individual products based on the relative weights of the products. Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops R40 30 R1 200 R450 R750 Bacon R30 50 R1 500 R750 R750 Ham R12 120 R1 440 R1800 (R360) R4 140 R3 000 R1 140 Day 2: The butcher buys an identical pig and throws out the ham because the previous day's analysis showed that it lost money. She now has 80 kgs of "good output". Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops Bacon R40 R30 30 R1 200 R1 125 R75 50 R1 500 R1 875 (R375) R2 700 R3 000 (R300) Day 3: The butcher buys an identical pig and throws out the ham and the bacon because the previous days' analyses showed that they lost money. She now has 30 kgs of "good output". Selling price Weight (kg) Revenues Joint costs Operating Income Pork chops R40 30 R1 200 R3 000 (R1 800) R1 200 R3 000 (R1 800) Day 4: The butcher buys an identical pig and throws out the whole pig because the previous days' analyses showed that it lost money. Therefore, she lost R3 000. Required: 1.1 1.2 How could the joint costs be allocated to all three products using the sales value at split-off method? Should the operating income numbers for requirement 1.1 above be used to determine if the butcher is better off selling or not selling individual products? Briefly explain.
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To analyze the butchers decisionmaking process we can calculate the operating income for each produc... View the full answer
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