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Joint costs and the two methods to allocate: Assume you are in the dairy industry and process raw milk into pasteurized milk. The pasteurization process
Joint costs and the two methods to allocate:
Assume you are in the dairy industry and process raw milk into pasteurized milk. The pasteurization process costs $100,000 per month. After pasteurization, an average of 150,000 gallons of milk are processed into cheese valued at $250,000 dollars and an average of 100,000 of gallons of milk are processed into ice cream powder valued at $275,000. Allocate the joint costs to each product based on gallons and based on sales value.
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