A landlord Mr. Park has a lot of lands and is planted with a variety of vegetables
Question:
A landlord Mr. Park has a lot of lands and is planted with a variety of vegetables and fruit. One of them is aloe vera, which its products have been selling to the Republic Natural cosmetics factory at a price of IDR 5000/kg. Aloe vera is shipped in boxes, where the net weight of aloe vera per box is 10kg. The box price is IDR 2000/pc. Shipping cost to the cosmetic factory is IDR 10,000/box. On average, each month farmers can harvest 1000 kg of aloe vera. The cost of maintaining aloe vera for a month is IDR 2,500,000.
Park is considering turning the aloe vera into a popular aloe vera drink. However, this requires additional processing costs (overhead) for every 100 kg of raw aloe vera of IDR 500,000, which later becomes 50 kg of aloe vera meat after being cooked and sold in 200 gram bags. The selling price of the aloe vera drink is IDR 5,000/bag. The pocket price is IDR 500/pc. The drinks will be sold to local distributors, Kohl Family, with a delivery fee of IDR 10,000/box. Where 1 box contains 10 bags of aloe vera drinks. The price of a box of drinks is IDR 3000/pc.
Mr. Park was wondering which was better. Should it still be sold directly to cosmetic companies or be processed further into aloe vera drinks?
a. Calculate the ratio between aloe vera sold directly to cosmetic companies or further processed as an aloe vera drink.
b. What decision should Mr. Park from the calculation above?
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac