Question
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:
- Sales Value at spilt off method
- Physical measure method
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started