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The Rich and Creamy Edibles Factory manufactures and distributes chocolate products. (Click the icon to view more information about Rich and Creamy.) GO Production and
The Rich and Creamy Edibles Factory manufactures and distributes chocolate products. (Click the icon to view more information about Rich and Creamy.) GO Production and sales data for August 2017 are as follows (assume no beginning inventory): (Click the icon to view the data.) Read the requirements. Requirement 1. Calculate how the joint costs of $70,000 would be allocated between chocolate powder and milk chocolate under the different methods. a. Sales value at splitoff method. Begin by entering the appropriate amounts to allocate the joint costs. (Round the weighting amounts to four decimal places.) Sales value of total Joint costs production at splitoff Weighting allocated Chocolate powder Milk chocolate Total - X More info . Cocoa beans processed, 27,600 pounds Costs of processing cocoa beans to splitoff point (including purchase of beans), $70,000 Separable Production Sales Selling Price Processing Costs Chocolate powder 31,280 pounds 6,800 pounds $8 per pound $ 46,035 Milk chocolate 50,600 pounds 14,400 pounds $9 per pound $ 55,085 Rich and Creamy Edibles 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 2017, Rich and Creamy Edibles Factory could have sold the chocolate-powder liquor base for $21 a gallon and the milk-chocolate liquor base for $28 a gallon. Print Done More info 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 600 pounds of cocoa beans yields 20 gallons of chocolate-powder liquor base and 60 gallons of milk-chocolate liquor base. The chocolate powder liquor base is further processed into chocolate powder. Every 20 gallons of chocolate-powder liquor base yield 680 pounds of chocolate powder. The milk-chocolate liquor base is further processed into milk chocolate. Every 60 gallons of milk-chocolate liquor base yield 1,100 pounds of milk chocolate. Print Done Requirements a. C. 1. Calculate how the joint costs of $70,000 would be allocated between chocolate powder and milk chocolate under the following methods: Sales value at splitoff b. Physical measure (gallons) NRV (Net Realizable Value) d. Constant gross-margin percentage NRV 2. What are the gross-margin percentages of chocolate powder and milk chocolate under each of the methods in requirement 1? 3. Could Rich and Creamy Edibles Factory have increased its operating income by a change in its decision to fully process both of its intermediate products? Show your computations. Print Done
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