Chicken Little grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2007 is:

Joint cost of production in July 2007 was $100.
A special shipment of 20 pounds of breasts and 10 pounds of wings has been destroyed in a fire. Chicken Little's insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Chicken Little to use a joint-cost-allocation method. The split off point is assumed to be at the end of the production process.
1. Compute the cost of the special shipment destroyed using.
a. Sales value at split off method
b. Physical-measure method (pounds of finished product)
2. What joint-cost-allocation method would you recommend Chicken Little use? Explain.

Transcribed Image Text:

Wholesale Selling Price per Pound When Production Is Complete $1.10 0.40 0.70 0.20 0.10 Parts Pounds of Product Breasts Wings Thighs Bones Feathers 100 20 40 80 10