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Instant Foods produces two types of microwavable productsbeef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production

Instant Foods produces two types of microwavable productsbeef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices.

The production of ramen results in a waste product referred to as stock, which Instant dumps at negligible costs in a local drainage area.

In June 2012, the following data were reported for the production and sales of beef-flavored and shrimp-flavored ramen:

Joint Cost

Beef

Shrimp

Joint Costs (cost of Noodles, spices, other inputs and processing to split off point)

$240,000

Beginning Inventory

0.00

0.00

Production (tons)

10,000

20,000

Sales (tons)

10,000

20,000

Selling price per ton

$10

$15

Due to the popularity of its microwavable products, Instant decides to add a new line of products that target dieters. These new products are produced by adding a special ingredients to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. The following is the monthly data for all the products:

Joint Cost

Beef Ramen

Shrimp Ramen

Special B

Special S

Joint Costs (cost of Noodles, spices, other inputs and processing to split off point)

$240,000

Separable cost of processing 10,000 tons of Beef Roman into 12,000 tons of Special B

48,000

Separable cost of processing 20,000 tons of Shrimp Roman into 24,000 tons of Special S

$168,00

Beginning Inventory (tons)

0

0

0

0

Production (tons)

10,000

20,000

12,000

24,000

Sales (tons)

12,000

24,000

Selling price per ton

$10

$15

$18

$25

Required:

Calculate Instants's Gross-margain percentage for Special B and Special S when joint cost are allocated using the following:

  1. Sales Value at spilt off method
  2. Physical measure method

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