Question
The Cocoa Nibs Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate? products: chocolate-powder liquor base and? milk-chocolate
The Cocoa Nibs Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate? products: chocolate-powder liquor base and? milk-chocolate liquor base. These two intermediate products become separately identifiable at a single splitoff point. Every 900 pounds of cocoa beans yields 30 gallons of? chocolate-powder liquor base and 120 gallons of? milk-chocolate liquor base. The? chocolate-powder liquor base is further processed into chocolate powder. Every 30 gallons of? chocolate-powder liquor base yield 670 pounds of chocolate powder. The? milk-chocolate liquor base is further processed into milk chocolate. Every 120 gallons of? milk-chocolate liquor base yield 1 comma 090 pounds of milk chocolate.
Production and sales data for August 2014 are as follows? (assume no beginning? inventory):
times | Cocoa beans? processed, 19,800 pounds |
times | Costs of processing cocoa beans to splitoff point? (including purchase of? beans), $68,000 |
| Production | Sales | Selling Price | Separable Processing Costs | ||||
Chocolate powder | 14,740 | pounds | 6,700 | pounds | $12 | per pound | $8,975 | |
Milk chocolate | 23,980 | pounds | 14,500 | pounds | $10 | per pound | $91,095 |
Cocoa Nibs Factory fully processes both of its intermediate products into chocolate powder or milk chocolate. There is an active market for these intermediate products. In August 2014?, Cocoa Nibs Factory could have sold the? chocolate-powder liquor base for $24 a gallon and the? milk-chocolate liquor base for $9 a gallon.
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