Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company 1 has the following operational units and supervisors. Operational Unit Supervisor Farm management (growing, harvesting, storage) K B Processing M M Marketing S L

Company 1 has the following operational units and supervisors.

Operational Unit Supervisor

Farm management (growing, harvesting, storage) K B

Processing M M

Marketing S L

Administration S L

One of the activities of the Processing Unit is to take the coconuts from the Farm Management unit and process them into bottled coconut water, coconut powder, and coconut oil. The process is a mixture of labor and machinery but up to the point of split-off, the process generates common costs of $80,000. On a typical day of production, the operational results are:

Product

Amount at split-off

Weight (lbs.) at split-off

Cost beyond split-off

Selling price

Coconut water

5,200 liters

11,440

$2.00 per liter

$20.00 per liter

Coconut powder

5,000 lbs.

5,000

$8.20 per lb.

$10.00 per lb.

Coconut Oil

1,250 liters

2,520

$2.50 per liter

$30.00 per liter

At present, the company allocates joint or common costs based on relative weight of the product at split-off point. As the consultant, you want to recommend the net realizable approach and decided to do the calculations first.

Required: Prepare an analysis of the two methods of allocating the common or joint costs and then decide what recommendation (if any) you would make to the company.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Auditory Culture Reader

Authors: Michael Bull, Les Back

2nd Edition

1472569024, 978-1472569028

More Books

Students also viewed these Accounting questions

Question

Verify the statement made in the remark following Example 10.2.

Answered: 1 week ago