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31. Del Monte Co. jointly processes three pineapple products Premium, good, and Fair., in the Cleaning and Sorting Department. Premium and Good products are
31. Del Monte Co. jointly processes three pineapple products Premium, good, and Fair., in the Cleaning and Sorting Department. Premium and Good products are joint products, while Fair is considered a by-product. Premium and Fair pineapples can be sold as they are to customers at the end of the Cleaning and Sorting process, whereas Good pineapples are processed further in the Cutting and Canning Department before they are sold to customers. During the month, the company paid P45,000 for one truckload of pineapples and P2,100 for the labor to sort the pineapples into categories. Del monte uses a pre-determined overhead rate of 40% of direct labor costs. The following yield, costs, and final sales value resulted form the month's truckload of pineapples. I + Yield in packs Premium 1,500 Good Fair 2,000 500 Cutting and canning costs P6,567 Total packaging and delivery costs P3,933 P6,600 Total final sales value P90,000 P45,000 P1,500 P13,500 a.) Allocate the joint cost to Premium using the approximated net realizable value at split off method, assuming that the by-product is recorded when realized and is shown as Other income on the income statement. b.) Allocate the joint cost to Good using approximated net realizable value at split off method, assuming that the by-product is recorded using the net realizable value approach.
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