Joint Products and Inventory Valuation.

Required:

Calculate costs per pound of each product produced under each of the following conditions.

Use the sales value method.

a. Sweet Tooth Chocolate Company purchases their basic raw materials in 100-pound lots at $100 per lot. From each 100-pound lot, Sweet Tooth produces the following most profitable combination of products at a processing cost of $100:

Weight Sales Price Product (pounds) Per Pound Mini Bars 60 $ 2.00 Standard Bars 30 2.50 Super Bars 10 3.00

b. Assume the same facts as above except that Standard Bars can be processed further by adding peanuts at a cost of $0.25 per pound of Standard Bars. Each pound of Standard Bars can be converted into one pound of Peanut Bars which have a sales price of $2.80 per pound.

c. Assume the same facts as in

(a) and

(b) except that there is no market and thus no market value for Standard Bars at the point of separation from its co-products.

LO.1