Bramble Galore, a local orchard, grows and sells apples and apple pies. At harvest time, apples are
Question:
Bramble Galore, a local orchard, grows and sells apples and apple pies. At harvest time, apples are sorted into saleable apples and defective apples. The defective apples are considered a by-product and are sold as animal feed to local hog farmers. The saleable apples are sorted by size. The larger, visually appealing apples are sold as eating apples. The smaller apples could be sold as seconds or processed further into apple pies, which are then sold at farmers’ markets. Bramble Galore makes 4 pies from each bushel of apples. Joint costs for the apple orchard are $177,000.
Additional information is as follows:
Allocation Base | | Animal Feed | | Eating | | Seconds | | Pies |
Bushels of Apples | | 5,000 | | 27,000 | | 8,000 | | |
Sales value per bushel at harvest | | $2 | | $8 | | $5 | | |
Additional processing costs | | | | | | | | $10/pie |
Net Realizable Value | | $2 per bushel | | $8 per bushel | | $5 per bushel | | $160,000 per pie |
Determine the net income for Bramble Galore if all of the apples are sold at the split-off point.
Net Income | | $______ |
Cost Management Measuring, Monitoring and Motivating Performance
ISBN: 978-1119185697
3rd Canadian edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang-Hsuan Chen, Gail Cook