Question
Top Quality Fruit Company, based in Costa Rica, grows, processes, cans and sells three, main pineapple products: sliced, crushed, and juice. The outside skin is
Top Quality Fruit Company, based in Costa Rica, grows, processes, cans and sells three, main pineapple products: sliced, crushed, and juice. The outside skin is cut off in the Cutting Department and processed as animal fee. The feed is treated as a by-product. The company's production process is as follows:
- Pineapples first are processed in the Cutting Department. The pineapples are washed and the outside skin is cut away. Then the pineapples are cored and trimmed for slicing. The three main products (sliced, crushed, juice) and the by-product (animal feed) are recognized after processing in the Cutting department. Each product then is transferred to a separate department for final processing.
- The trimmed pineapples are sent to the Slicing Department, where the pineapples are sliced and canned. Any juice generated during the slicing operation is packed in the cans with the slices.
- The pieces of pineapple trimmed from the fruit are sliced and canned in the Crushing Department. Again the juice generated during this operation is packed in the can with the crushed pineapple.
- The core and surplus pineapple generated from the Cutting Department are pulverized into a liquid in the Juicing Department. There is an evaporation loss equal to 8 percent of the weight of the good output produced in this department that occurs as the juices are heated.
- The outside skin is chopped into animal feed in the Feed Department
Top Quality Company uses the net realizable method to assign the costs of the joint process to its main products. The net realizable value of the by-product is subtracted from the joint cost before the allocation.
A total of 270,000 kilograms were entered into the Cutting Department during June. The following schedule shows the costs incurred in each department, the proportion by weight transferred to the four final processing departments, and the selling price of each product.
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