Question
I don't understand how to allocate costs by net realizable value, relative sizes value, and by weight. The question is one that you have online
I don't understand how to allocate costs by net realizable value, relative sizes value, and by weight. The question is one that you have online but it is obviously wrong! Could you please explain how to allocate? The question is :
The Parvis Paramount Pigsty (PPP) raises pigs, from which a variety of pork products are processed. The herd features the Danish Yorkshire, which typically reaches 105 kgs at maturity. The following table summarizes the production process of producing Porktry, Porfekt, and Porkatoo from one pig.
Previous research has indicated that raising a Danish Yorkshire from breeding to disposition costs an average of 3 per kg. The ratio of pig parts to products is relatively inflexible; as yet, bio-engineering has failed to produce pigs with other than four legs. Of the statements below, which is true of the allocation of the joint costs?
Weight in kgs: Porktry 45 Porfekt 20 Porkatoo 35
Sale Price, kg porktry 22.50 euros Porfekt 84.00 euros Porkatoo 28.00 euros
Processing costs per kg: Porktry 6.75 euros Porfekt 25.20 euros Porkatoo 7.00 euros
A. By weight, Porktry is allocated 81.41
B. By relative sales value, Porkatoo is allocated 80.05
C. Since Porktry is the least profitable product, it should be discontinued and resources devoted to Porfekt
D. By relative net realizable values, Porfekt is allocated 135.09
E. None of the above
PLEASE DO NOT JUST GIVE ANSWER... Giving the answer isn't even necessary...just please explain how I allocate according to weight, relative sales value, and net realizeable values!
Thank you!
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