Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and
The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional, separable processing costs, as shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $190,000,000. Sales values and costs needed to evaluate Bean's production policy follow: Premium 30,000,000 $ 29,000,000 30,000,000 Gourmet 36,000,000 $ 27,000,000 36,000,000 Quality 6,000,000 $ 25,000,000 6,000,000 Pounds produced Separable processing cost Pounds sold Total joint cost Sales price/pound (after additional processing) Sales price at split-off Total 72,000,000 $ 81,000,000 72,000,000 $ 190,000,000 $ 8 6 6 5 $3 2 Required: 1. Determine last year's unit cost and unit gross profit for each product assuming Bean allocates joint production costs using the physical measure method. 2. Determine unit cost and unit gross profit for each product if Bean allocates joint costs using the sales value at split-off method. 3. Which of Bean's products should be processed further
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started