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Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are
Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 20,000 pounds of apples is as follows: Assume that Orchard Fresh, Inc., uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of apples: Price at Split-Off Grades Pounds (per lb.) Grade A 1,500 $4.00 Grade B 5,000 1.00. Slices 8,000 0.50 Applesauce 5,500 0.101 Total 20,000 Total joint cost is $19,000. Required: 1. Allocate the joint cost to the four grades of apples using the sales-value-at-split-off method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation Grade A 7,331 X Grade B Slices Applesauce Total
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