Rain, Inc., is a large food-processing company. It processes 157,000

pounds of peanuts in the peanuts department at a cost of $303,100

to yield 25,000 pounds of product A, 99,000 pounds of product B, and 14,000 pounds of product C.

Product A is processed further in the salting department to yield 25,000

pounds of salted peanuts at a cost of $36,000 and sold for $12 per pound.

Product B (raw peanuts) is sold without further processing at $4 per pound.

Product C is considered a byproduct and is processed further in the paste department to yield 14,000 pounds of peanut butter at a cost of $13,000 and sold for $7 per pound.

The company wants to make a gross margin of 10% of revenues on product C and needs to allow 20% of revenues for marketing costs on product C. An overview of operations follows:

Joint Costs $303,100

Peanuts Department processing of 157,000 lb

Separable costs

25,000 pounds Salting Department processing $36,000

14,000 pounds Paste Department processing $13000

Salted Peanuts 25,000 pounds $12/lb

Raw peanuts 99,000 pounds $4/lb

Peanut butter 14,000 pounds $7/lb

1.	Compute unit costs per pound for products A, B, and C, treating C as a byproduct. Use the NRV method for allocating joint costs. Deduct the NRV of the byproduct produced from the joint cost of products A and B.
2.	Compute unit costs per pound for products A, B, and C, treating all three as joint products and allocating joint costs by the NRV method.