Downeast Fisheries operates a fish processing plant. Fish is processed in batches of 10,000 kilograms. Processing...
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Downeast Fisheries operates a fish processing plant. Fish is processed in batches of 10,000 kilograms. Processing fish yields three products: • fillets, which are sold fresh or quick-frozen • fish pieces, which are sold to another fish-products plant to be used in breaded fish cakes • offal (unused parts of the fish), which is transported to a fertilizer plant The following table summarizes the yield and financial characteristics of processing a batch of fish: Yield (kilograms) Revenue (disposal cost) per kilogram Separable processing and selling cost per kilogram Fillets Pieces Offal Required: a) Should the fillets be sold as fresh fish or quick-frozen? 2,000 1,000 7,000 $6.00 $1.50 $1.00 $3.00 ($0.20) 0 Fresh fish can be quick-frozen with an associated separable processing and selling cost of $0.50 per kilogram; it is then sold for $5.50 per kilogram. Quick-freezing also incurs a fixed cost of $500 per batch. If the fresh fish is frozen, the $1.50 separable cost of processing the fresh fish would be avoided. a) Assume that the joint cost, which includes the cost of purchasing and processing the fish, is $7,000 per batch, and that the offal is treated as a by-product that is recognized at the split- off point. Allocate the joint cost to each of the products using: i) Physical output method ii) Net realizable value method iii) Constant gross margin percentage Downeast Fisheries operates a fish processing plant. Fish is processed in batches of 10,000 kilograms. Processing fish yields three products: • fillets, which are sold fresh or quick-frozen • fish pieces, which are sold to another fish-products plant to be used in breaded fish cakes • offal (unused parts of the fish), which is transported to a fertilizer plant The following table summarizes the yield and financial characteristics of processing a batch of fish: Yield (kilograms) Revenue (disposal cost) per kilogram Separable processing and selling cost per kilogram Fillets Pieces Offal Required: a) Should the fillets be sold as fresh fish or quick-frozen? 2,000 1,000 7,000 $6.00 $1.50 $1.00 $3.00 ($0.20) 0 Fresh fish can be quick-frozen with an associated separable processing and selling cost of $0.50 per kilogram; it is then sold for $5.50 per kilogram. Quick-freezing also incurs a fixed cost of $500 per batch. If the fresh fish is frozen, the $1.50 separable cost of processing the fresh fish would be avoided. a) Assume that the joint cost, which includes the cost of purchasing and processing the fish, is $7,000 per batch, and that the offal is treated as a by-product that is recognized at the split- off point. Allocate the joint cost to each of the products using: i) Physical output method ii) Net realizable value method iii) Constant gross margin percentage
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Revenue when sold as fresh fish615 x 2000 45 x 2000 9000 Revenue when sold as quick frozen55 052000 ... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
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