chap 7

Allocating Joint Oosts Using the Sales-Value-at-Spit-o Method Sunny Lane, Inc., purchases peaches from local orchards and sarts 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. Posches to be sliced for canned poaches and even smaller than Grade B peaches and have blemishes. Poaches 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 af 20,000 pounds of peaches is as follows: Assume that Sunny Lane, Inc, uses the sales-value-at-split-off method of joint cost allocation and has provided the following information about the four grades of peaches: Grades Pounds Price at Split-off (per Ib.) Grade A 1,500 $5.00 Grade 8 5,000 2.00 Slices 9,000 1.30 Pureed 5,500 0.80 Total 20,000 Total joint cost is $18,000, Required: 1. Allocate the joint cost to the four grades of peaches 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 Allocation Grades Grade 1,500 X Grade B Slices Pureed Total 2. What if the price at split-off of Grede peaches decreased to 51.60 per pound? How would that affect the allocation of cost to Grade B peaches? How would it affect the allocation of cost to the remaining grades? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Joint Cost Grades Allocation Grade A Grade B Slices Purned Total