Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is:

Joint cost of production in July 2012 was $50.
A special shipment of 40 kilograms of breasts and 15 kilograms of wings has been destroyed in a fire. Quality Chicken€™s insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Quality Chicken to use a joint cost allocation method. The splitoff point is assumed to be at the end of the production process.
REQUIRED
1. Compute the cost of the special shipment destroyed using:
a. Sales value at splitoff method.
b. Physical measure method (kilograms of finished product).
2. What joint cost allocation method would you recommend Quality Chicken use? Explain.

Transcribed Image Text:

Wholesale Selling Price per Kilogram When Production Is Complete Kilograms of Product 100 20 40 80 10 Parts Breasts Wings Thighs Bones Feathers $0.55 0.20 0.35 0.10 0.05