Question
Shaffner Corporation produces three products, Alfa, Beta and Gama. Alfa and Gama are joint products, while Beta is a by-product of Alfa. There is no
Shaffner Corporation produces three products, Alfa, Beta and Gama. Alfa and Gama are joint products, while Beta is a by-product of Alfa. There is no combined fee to be allocated to the by-product. The production process for the current year is as follows:
a. In Department 1, 110,000 pounds of Rho raw material are processed, with a total cost of $ 120,000. After processing, 60% of the units are transferred to Department 2, and 40% of the units (now called Gama) are transferred to Department 3. b. In Department 2, the product is further processed at an additional cost of $ 38,000. 70% of the units (now called Alfa) are transferred to Department 4 and 30% of the units are by-products (Beta) which are sold at a price of $ 1.20 per pound. Marketing expenses related to Beta are $ 8100. c. In Department 4, Alfa is processed at an additional cost of $ 23,660. After the process is complete, Alfa is ready to sell for $ 5 per pound. d. In Department 3, Gama is processed with an additional fee of $ 165,000. Within the department there is a normal loss of the Gama unit, which is 10% of the output unit. The remaining units sell for $ 12 per pound. Requested: 1. What is the cost per unit for Alfa and Gama? Assume that by-products increase sales from Alfa. 2. What is the ending inventory if Alfa and Gama sold 30,000 units each?
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