Mayflower Dairy Products buys one input, full-cream milk, and refines it in a churning process. From...

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Mayflower Dairy Products buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk, Mayflower produces four cups of butter and twelve cups of buttermilk. During July 2015, Mayflower bought 20,000 gallons of milk for $120,000. Mayflower spent another $84,000 on the churning process to separate the milk into butter and buttermilk. Butter can be sold immediately for $20.00 per pound and buttermilk can be sold immediately for $1.00 per 4 pound. (Note: two cups = one pound) Mayflower chooses to process the butter further into spreadable butter by mixing it with sunflower oil, incurring an additional cost of $6.40 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $9.50. Required: a Allocate the $204,000 ($120,000 + $84,000) joint cost to the spreadable butter and the buttermilk using the following methods: i physical-measure method (in cups) of joint cost allocation ii sales value at split off method of joint cost allocation ii NRV method of joint cost allocation iv constant gross margin percentage NRV method of joint cost allocation. b Some claim that the sales value at split off method is the best method to use. Discuss the logic behind this claim. Mayflower Dairy Products buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk, Mayflower produces four cups of butter and twelve cups of buttermilk. During July 2015, Mayflower bought 20,000 gallons of milk for $120,000. Mayflower spent another $84,000 on the churning process to separate the milk into butter and buttermilk. Butter can be sold immediately for $20.00 per pound and buttermilk can be sold immediately for $1.00 per 4 pound. (Note: two cups = one pound) Mayflower chooses to process the butter further into spreadable butter by mixing it with sunflower oil, incurring an additional cost of $6.40 per pound. This process results in two tubs of spreadable butter for each pound of butter processed. Each tub of spreadable butter sells for $9.50. Required: a Allocate the $204,000 ($120,000 + $84,000) joint cost to the spreadable butter and the buttermilk using the following methods: i physical-measure method (in cups) of joint cost allocation ii sales value at split off method of joint cost allocation ii NRV method of joint cost allocation iv constant gross margin percentage NRV method of joint cost allocation. b Some claim that the sales value at split off method is the best method to use. Discuss the logic behind this claim.

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Total Milk in Gallon 20000 Total Cost 3D 204000 Physical Measure Method in Cups Particul... View the full answer