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Peters Pineapples is a pineapple grower. After cultivating, fertilizing, growing and picking pineapples, the company makes and sells three products; sliced pineapple, pineapple juice and
Peters Pineapples is a pineapple grower. After cultivating, fertilizing, growing and picking pineapples, the company makes and sells three products; sliced pineapple, pineapple juice and mash used for animal feed. Information about costs is: Product Units Produced Separable Costs Final Selling Price Sliced pineapple 900,000 cans $600,000 $3.00 per can Pineapple juice 400,000 bottles $150,000 $1.75 per bottle Mash 500,000 pounds $120,000 $0.50 per pound Cost to cultivate, fertilize, grow and pick pineapples totaled $1,000,000. Required: a) Determine the amount of joint costs allocated to each product using the net realizable value method. b) Determine the final cost per unit for each product. c) Determine the gross margin per unit for each product d) A fertilizer manufacturer approaches the President of the company and asks to buy the rinds and other excess materials currently used to produce Mash. He would be willing to pay $0.30 per pound for these materials. Would you advise the President to take this offer? Provide calculations supporting your advice
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