(Allocation of joint cost) T. Catchings Fish Processors produces three prod¬ ucts from its fish farm: fish, fish oil, and fish meal. During July 2006, the firm produced the following average quantities of each product from each pound (16 ounces) of fish processed:

Of each pound of fish processed, 2 ounces are waste. In July, the firm processed 50 tons of fish (1 ton equals 2,000 pounds). Joint cost amounted to $190,400. On average, each pound of product has the following selling prices: fish, $6; fish oil, $8; and fish meal, $4.

a. Allocate the joint cost using weight as the basis.

b. Allocate the joint cost using sales value as the basis.

c. Discuss the advantages and disadvantages of the answers to parts

(a) and (b). LO1.

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Product Fish Fish oil Fish meal Total Obtained from Each Pound of Fish 8 ounces 4 2 14 ounces