Goodman and Sons manufactures a number of joint products. The process begins in department 1 with 100,000 pounds, of which 30% goes to department 2, 60% goes to department 3, and the remainder is waste. From department 2, five-sixths goes to department 4 and one-sixth goes to department 5. There is no market for intermediate products; only the end products of department 3 (a by-product), department 4 (a main product), and department 5 (a main product) are sold. Goodman uses the net realizable value method to allocate joint costs, and the by-product value is recognized at the time of sale. Cost and sales data are as follows:

A. In this problem, the joint costs result from a number of different processes. What are the joint costs for products A and B (the two main products)?
B. What are the joint cost allocations for products A and B?
C. Develop an income statement for Goodman and Sons.
D. What opportunity cost could be assigned to product B for purposes of determining whether it should be processedfurther?

  • CreatedJanuary 26, 2015
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