Allocating Joint Costs

Forastero Farms is a leading producer of cocoa beans in South America. It produces two main products from the cocoa bean: sunscreen (from cocoa butter) and hot cocoa mix (from cocoa powder).

As the cost accounting supervisor, you are tasked with allocating the joint costs of production to both products.

Using the data in the attached

Calculate product costs using the net realizable value method (NRV).

Using the cost allocations from requirement 1, create a product-specific income statement

Separable costs sunscreen $600,000 Separable costs Hot Cocoa Mix $500,000 Cocoa butter is processed Cocoa beans are processed further to make Cocoa Butter and Cocoa Powder further to make sunscreen Cocoa powder is processed further to make Hot Coco Mix Cocoabutter Cocoa powder Sunscreen Hot Cocoa Mix Beg Inventory (pounds) Production Transfer \begin{tabular}{|r|r} \hline 0 & 0 \\ \hline & 150,000 \\ \hline & 150,000 \\ \hline \end{tabular} Sales in June End inventory (pounds) Selling price per pound Allocation of joint costs using net realizable value method Sunscreen Hot Cocoa Mix Total Final sales value Deduct separable costs Net realizable Value at splitoff point Weighting Joint costs Allocation Production Costs per Gallon Prod 90,000 pounds Prod 125,000 pounds Production Costs per Gallon Product line income statement using net realizable method Revenues costs of goods sold Joint costs Separable costs Production costs Ending inventory Cost of goods sold Gross margin Gross margin \%