Sybill Trelawney recently opened a farm in which she grows tea trees for tea leaves. Trelawney's...

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Sybill Trelawney recently opened a farm in which she grows tea trees for tea leaves. Trelawney's produces two grades of tea, #1 grade and #2 grade. Trelawney's sells the raw tea leaves to other companies that dry and mix the leaves into blends for sale, so no additional processing is required, and both grades of tea leaves are harvested at the same time. In March, the harvesting costs for the tea were $270,000. This harvest yielded 15,000 bushels of #1 grade leaves, and 30,000 bushels of #2 grade leaves. The #1 grade leaves are sold for $20 per bushel, and the #2 grade leaves are sold for $15 per bushel. Assume that Trelawney allocates joint costs using the sales value at the split-off point method. How much of the joint cost will be allocated to #1 grade leaves? Sybill Trelawney recently opened a farm in which she grows tea trees for tea leaves. Trelawney's produces two grades of tea, #1 grade and #2 grade. Trelawney's sells the raw tea leaves to other companies that dry and mix the leaves into blends for sale, so no additional processing is required, and both grades of tea leaves are harvested at the same time. In March, the harvesting costs for the tea were $270,000. This harvest yielded 15,000 bushels of #1 grade leaves, and 30,000 bushels of #2 grade leaves. The #1 grade leaves are sold for $20 per bushel, and the #2 grade leaves are sold for $15 per bushel. Assume that Trelawney allocates joint costs using the sales value at the split-off point method. How much of the joint cost will be allocated to #1 grade leaves?

Answer rating: 100% (QA)

To allocate joint costs using the sales value at the splitoff point method we need to calculate the ... View the full answer