Question
Joyous Julius, Inc., is a large retail chain that has grown quickly thanks to its successful leveraging of homemade-style orange julius. The company would like
Joyous Julius, Inc., is a large retail chain that has grown quickly thanks to its successful leveraging of homemade-style orange julius. The company would like to narrow down the number of flavors it offers to three.
Joyous Julius, Inc., currently produces six different flavors of orange julius: pure orange, raspberry orange, mango orange, strawberry orange, tropical orange, and coconut orange. The orange julius flavors are produced jointly in a mixing process that costs a total of $2,500 per batch. At the end of each joint production batch, 900 cups of pure orange Julius are produced. Another 1,180 cups of various Julius flavors are processed further. Information about the production of each batch is summarized in the following table:
Orange Julius Flavor | Cups per Batch | Market Value per Cup at Split-Off | Market Price per Cup After Further Processing | Added Cost per Cup | |||
Pure orange | 900 | $3.00 | $3.00 | $0.00 | |||
Raspberry orange | 500 | 3.00 | 3.35 | 0.15 | |||
Mango orange | 300 | 3.00 | 3.30 | 0.10 | |||
Strawberry orange | 150 | 3.00 | 3.30 | 0.20 | |||
Tropical orange | 130 | 3.00 | 3.10 | 0.40 | |||
Coconut orange | 100 | 3.00 | 3.25 | 0.65 |
One of the by-products of the production of the orange julius is orange peels. Joyous Julius, Inc., has found a company that produces nutritional smoothies that would be willing to buy Joyous Juliuss orange peels for $40 per batch. Joyous Julius, Inc., is interested in the deal but doesnt know how to account for these additional revenues.
a. With the given information identify the flavors that should not be processed beyond the split-off point. A
a. Tropical and coconut orange
b. Assuming pure orange is kept as a flavor, what other two flavors should the company keep? C
c. Mango orange and raspberry orange.
PLEASE HELP WITH THIS ONE>>>c. Assume that Joyous Julius, Inc., keeps pure orange and the two other flavors you identified in part (b) and that additional cups of the pure orange flavor replace all discontinued flavors in the joint production process. Using the net realizable value method, determine the amount of joint production costs that should be allocated to each of the remaining three products.
Joint Product | Allocation |
Pure orange | |
Raspberry orange | |
Mango orange | |
Totals |
d. What are the ways that revenue from a by-product can be recorded? B
b. The revenue from the by-product can be used to offset the cost of the joint production process or it can be reported as other revenue on the income statement.
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