Question: Description: Fruit Tree Nursery (FTN) grows peach and apple trees in containers for its customers. This past year, FTN grew 3,000 peach trees and 7,000
Description: Fruit Tree Nursery (FTN) grows peach and apple trees in containers for its customers. This past year, FTN grew 3,000 peach trees and 7,000 apple trees at a cost of $100,000. FTN can sell peach trees for $20 each and apple trees for $11 each.
Required:
- Allocate joint costs to each product using the physical quantities method, and calculate the profit or loss for each product.
- Allocate joint costs to each product using the relative sales value method, and calculate the profit or loss for each product.
- Assume peach trees can be processed further by allowing them to grow for another few months. The additional processing cost is $4 per tree, and customers are willing to pay $23 for the larger trees. Should FTN process the peach trees further? Explain.
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