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PepsiCo, Inc. produces beverages in batches, including soft drinks and juices. During July 2024, the company incurs joint production costs of 2 million and produces

PepsiCo, Inc. produces beverages in batches, including soft drinks and juices. During July 2024, the company incurs joint production costs of 2 million and produces 10,000 cases of soft drinks and 5,000 cases of juices. Soft drinks sell for $100 per case, while juices sell for $150 per case.

Required:

  • Allocate joint production costs using the physical units method.
  • Determine the cost per case for soft drinks and juices.
  • Calculate the gross profit for each product after allocating joint costs.
  • Analyze whether batch costing is appropriate for PepsiCo's product lines.
  • Discuss alternative methods for allocating joint costs and their implications.

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