FINS produces three products from its fish farm: fish, fish oil, and fishmeal. During July 2010, FINS produced the following average quantities of each product from each pound (16 ounces) of fish processed:
Product Obtained from Each Pound of Fish
Fish 8 ounces
Fish oil 4
Fish meal 2
Total 14 ounces
Of each pound of fish processed, 2 ounces are waste. In July, FINS processed 37.5 tons of fish (1 ton equals 2,000 pounds). Joint cost amounted to $142,800. On average, each pound of product has the following selling prices: fish, $4.50; fish oil, $6.50; and fish meal, $2.
a. Allocate the joint cost using weight as the basis. (Round to nearest whole percentage.)
b. Allocate the joint cost using sales value as the basis. (Round to nearest whole percentage.)
c. Discuss the advantages and disadvantages of the answers to parts (a) and (b).