Harum Manis Bhd. grows, processes, packages, and sells three mango products: slices that are used in frozen pies, mango jam, and mango juice. The outside skin of the mango, which is removed in the cutting department and processed as animal feed, is treated as a by-product. Harum Manis uses the net realizable value method to assign costs of the joint process to its main products. The mango skin by-product net realizable value is used to reduce the joint production costs prior to allocation to the main products. 

Details of Harum Manis' production process follow: 

• The cutting department washes the mangoes and removes the outside skin. The department then cores and trims the mangoes for slicing. At this point, each of the three main products and the by-product are recognizable. Each product is then transferred to the next department for final processing. 

• The slicing department receives the trimmed mangos and slices and freezes them. Any juice generated during the slicing operation is frozen with the slices. 

• The crushing department trims pieces of mango and processes them into mango jam. The juice generated during this operation is used in the mango jam. 

• The juicing department pulverizes the core and any surplus mango from the cutting department into a liquid. This department experiences a loss equal to 8 percent of the weight of the good output produced. 

• The feed department chops the outside skin into animal food and packages it. A total of 270,000 kgs of mangoes entered the cutting department during November. The following information shows the costs incurred in each department, the proportion by weight (based on kgs) transferred to the four final processing departments, and the selling price of each end product. Assume no beginning or ending inventory of mango slices, jam, or juice. 

 

Required 

a) Harum Manis uses the net realizable value method to determine inventory values for its main products and by-products. For the month of November, calculate each of the following: 

Output in kgs for mango slices, mango jam, mango juice, and animal feed. 

Net realizable value at the split-off point for each of the three main products. 

Cutting department cost assigned to each of the three main products and to the by- product in accordance with corporate policy. 

Gross margin in RM for each of the three main products.  

b) List the important issues that Harum Manis faces as a global company. What are its critical success factors? Which key issues arise because Harum Manis operates in several countries? Should any of these issues affect the way Harum Manis allocates costs, as determined in requirement (a)?

Transcribed Image Text:

Department Costs Incurred RM 60,000 11,280 8,550 3,000 700 RM 83,530 Cutting Slicing Crushing Juicing Feed Total Proportion of Product by Weight Transferred to Departments 33% 30% 27% 10% 100% Selling Price per kg of Final Product RM 0.80 0.55 0,40 0.10 Department Costs Incurred RM 60,000 11,280 8,550 3,000 700 RM 83,530 Cutting Slicing Crushing Juicing Feed Total Proportion of Product by Weight Transferred to Departments 33% 30% 27% 10% 100% Selling Price per kg of Final Product RM 0.80 0.55 0,40 0.10

Answer rating: 100% (QA)

Answer A 1 Output in kgs for Mango slices Jam Animal Feed All outpeet of Cutting Department where to... View the full answer