Allocating Joint Costs Using the Physical Units Method Sunny Lane, Inc , purchases peaches from local orchards and sorts them into four categories Grade A are large blemish free peaches that can be sold to gourmet fruit sellers Grade B peaches are smaller and may be slightly out of proportion These are packed in boxes and sold to grocery stores Peaches to be sliced for canned peaches are even smaller than Grade B peaches and have blemishes Peaches to be pureed for use in sauces are of lower grade than peaches for slices, yet still food grade for canning Information on a recent purchase of 25,000 pounds of peaches is as follows Grades Pounds Grade A 2,000 Grade B 6,250 Slices 10,000 Pureed 6,750 Total 25,000 Total joint cost is $18,750 Required 1 Allocate the joint cost to the four grades of peaches using the physical units method Joint Cost Grades Allocation Grade A fill in the blank Grade B fill in the blank Slices fill in the blank Pureed fill in the blank Total fill in the blank 2 Allocate the joint cost to the four grades of peaches by finding the average joint cost per pound and multiplying it by the number of pounds in the grade Round the average cost answer to the nearest cent Average cost $fill in the blank 6 per pound Joint Cost Grades Allocation Grade A fill in the blank Grade B fill in the blank Slices fill in the blank Pureed fill in the blank 3 What if there were 2,500 pounds of Grade A peaches and 5,750 pounds of Grade B How would that affect the allocation of cost to these two grades How would it affect the allocation of cost to the remaining common grades Joint Cost Grades Allocation Grade A fill in the blank Grade B fill in the blank Slices fill in the blank Pureed fill in the blank

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Allocating Joint Costs Using the Physical Units Method Sunny Lane, Inc., purchases peaches from local orchards and sorts them into four categories. Grade A are

Allocating Joint Costs Using the Physical Units Method

Sunny Lane, Inc., purchases peaches from local orchards and sorts them into four categories. Grade A are large blemish-free peaches that can be sold to gourmet fruit sellers. Grade B peaches are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Peaches to be sliced for canned peaches are even smaller than Grade B peaches and have blemishes. Peaches to be pureed for use in sauces are of lower grade than peaches for slices, yet still food grade for canning. Information on a recent purchase of 25,000 pounds of peaches is as follows:

Grades	Pounds
Grade A	2,000
Grade B	6,250
Slices	10,000
Pureed	6,750
Total	25,000

Total joint cost is $18,750.

Required:

1. Allocate the joint cost to the four grades of peaches using the physical units method.

	Joint Cost
Grades	Allocation
Grade A	fill in the blank
Grade B	fill in the blank
Slices	fill in the blank
Pureed	fill in the blank
Total	fill in the blank

2. Allocate the joint cost to the four grades of peaches by finding the average joint cost per pound and multiplying it by the number of pounds in the grade. Round the average cost answer to the nearest cent.

Average cost = $fill in the blank 6 per pound.

	Joint Cost
Grades	Allocation
Grade A	fill in the blank
Grade B	fill in the blank
Slices	fill in the blank
Pureed	fill in the blank

3. What if there were 2,500 pounds of Grade A peaches and 5,750 pounds of Grade B? How would that affect the allocation of cost to these two grades? How would it affect the allocation of cost to the remaining common grades?