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Processing beyond split-off and cost allocations All-A-Buzz makes three products from a joint production process using honey. Joint cost for the process for the year
Processing beyond split-off and cost allocations All-A-Buzz makes three products from a joint production process using honey. Joint cost for the process for the year is $221,760. Per Unit Incremental Units of Selling Price Processing Final Sales Product Output at Split-Off Cost Price Honey butter 18,000 4.00 $3.00 $6.00 Honey jam 36,000 6.40 4.00 14.00 Honey syrup 1,800 3.00 0.40 3.60 Each container of honey butter, jam, and syrup, respectively, contains 16 ounces, 8 ounces, and 3 ounces of product. a. Determine which products should be processed beyond the split-off point. Process Further? Honey butter No Honey jam Yes Honey syrup Yes b. Assume honey syrup should be treated as a by-product. Allocate the joint cost based on (1) units produced, (2) weight, and (3) sales value at split-off. Use the net realizable value approach, assuming by-product revenues reduce joint production costs. (1) joint cost allocated based on units produced X Honey butter $ Honey jam Total $ X (2) joint cost allocated based on weight Honey butter $ Honey jam Total $ X X (3) joint cost allocated based on sales value at split-off Note: Round proportions to the nearest whole percentage and dollar amounts to the nearest whole dollar. X Honey butter $ Honey jam Total
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