Question
Wake-Me-Up Company manufactures 800 pounds of regular ground coffee and 1,200 pounds of specialty ground coffee in which $3,000 of joint costs have been incurred
Wake-Me-Up Company manufactures 800 pounds of regular ground coffee and 1,200 pounds of specialty ground coffee in which $3,000 of joint costs have been incurred at the split-off point
a. If management decides to use the physical units method to allocate joint costs, how much of the cost will be allocated to each of the two final products?
b. Wake-Me-Up can sell each product at the split-off point or process the products further in relatively similar processes, so management has decided that the most appropriate method for allocating joint costs is the market value at split-off point. One pound of regular coffee sells for $7, while one pound of specialty coffee sells for $10. How much of the joint cost is allocated to regular and specialty coffee? Round percentages to the nearest whole percent.
c. Wake-Me-Up decides to incorporate a processing time weight factor of 1 for the regular coffee and 2 for the specialty coffee. How much of the joint cost will be allocated to each product using the weighted average method? Round percentages to the nearest whole percent.
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