Forastero Farms is a leading producer of cocoa beans in South America.It produces two main products from the cocoa bean: sunscreen (from cocoa butter) and hot cocoa mix (from cocoa powder).
 
As the cost accounting supervisor, you are tasked with allocating the joint costs of production to both products.
 
Required information:
 
 -Calculate product costs using the net realizable value method (NRV).

 -Using the cost allocations from requirement 1, make a product-specific income statement.           

Joint costs                                             $                     1,430,000           [from 300,000 pounds of cocoa beans]      
  Separable costs sunscreen             $                       600,000                
 Separable costs Hot Cocoa Mix      $                        500,000              
       
Cocoa beans are processed further to make Cocoa Butter and Cocoa Powder    
                                             Cocoa butter    Cocoa powder        
Beg Inventory (pounds)      0                                    0  
Production                         100,000                   150,000  
 Transfer                            100,000                   150,000  
Sales in June    
  End inventory (pounds)         0                            0  
 Selling price per pound        22                         17        


Cocoa butter is processed further to make sunscreen Cocoa powder is processed further to make Hot Cocoa Mix  
 Sunscreen           Hot Cocoa Mix        
   0                                        0    
90,000                       125,000          
 76,000                       114,000    
14,000                         11,000    
37                                     48    

Required:  

1). Compute the Net Realizable Value (NRV) Method.

2). Compute the Product Line Income statement for month ended June using the NRV Method.

Answer rating: 100% (QA)

1 Cocoa Butter NRV 14000 x 22 1430000300000 x 14000 NRV 30... View the full answer