Hal, Dal, & Stal Dairy Farmers, Inc., produces whole milk, 2% milk, and cream. The joint cost of
producing these three products is $4,000. The split-off quantities of each product are 3,500 gallons
of whole milk, 1,500 gallons of 2% milk, and 500 gallons of cream. The company can sell whole
milk and cream at the split-off point, but 2% milk must be processed further before being sold.
Whole milk and cream sell for $2.00 per gallon and $3.00 per gallon, respectively, at the split-off
point. Although 2% milk requires further processing to be sold, management estimates a market
value of $1.00 per gallon for 2% milk at the split-off point. Using the market value at split-off
method, determine the amount of the total joint cost to be allocated to each product.
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- Kingston Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $90,000 in the production of 20,000 gallons of P and 50,000 gallons of Q. Kingston can sell P and Q at split-off for $2.00 per gallon and $2.20 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows: P Q Separable processing costs $ 22,000 $ 42,000 Sales price (per gallon) if processed beyond split-off $ 4 $ 6 what woulkd be the joint cost allocated to Q under the relative-sales-value method ? Note: Do not round intermediate calculations.arrow_forwardIn a joint processing operation, Scarecrow Gardens Ltd. manufactures three varieties of products from a common input, corn. Joint processing costs up to the split-off point total $90,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: whole corn $57,000; dried corn kernels $65,000; and ground corn meal $74,500. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below: Product Additional Processing Costs Sales Value Whole Corn $27,175 $95,250 Dried Corn Kernels $29,760 $104,470 Ground Corn Meal $20,400 $92,300 REQUIRED: Which product or products should be sold at the split-off point, and which product or products should be processedfurther. Explain why…arrow_forwardShannon’s distributes its beer through a wholesaler, Miller of Denton. The retail selling price for a six pack of its typical craft beer is $12.00. The retailer’s cost per six pack is $8.00. The wholesaler sells the beer to the retailer for this price. Shannon’s sells a six pack to the wholesaler for $5.40. Shannon’s variable costs of production, packaging, and distribution are $3.60 per six pack. Shannon’s has the following annual fixed operating and marketing costs: Marketing Costs $52,405 Consumer Advertising $31,017 Trade Promotion $30,000 Sales Promotion $18,000 What is Shannon’s annual break-even in six packs of beer sold?arrow_forward
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