Processing beyond split-off and cost allocations All-A-Buzz makes three products from a joint production process using honey. Joint cost for the process for the year is $197,120.

		Per Unit	Incremental
	Units of	Selling Price	Processing	Final Sales
Product	Output	at Split-Off	Cost	Price
Honey butter	16,000	4.00	$3.00	$6.00
Honey jam	32,000	6.40	4.00	14.00
Honey syrup	1,600	3.00	0.40	3.60

Each container of honey butter, jam, and syrup, respectively, contains 16 ounces, 8 ounces, and 3 ounces of product. a. Determine which products should be processed beyond the split-off point.

	Process Further?
Honey butter	AnswerYesNo
Honey jam	AnswerYesNo
Honey syrup	AnswerYesNo

b. Assume honey syrup should be treated as a by-product. Allocate the joint cost based on (1) units produced, (2) weight, and (3) sales value at split-off. Use the net realizable value approach, assuming by-product revenues reduce joint production costs. (1) joint cost allocated based on units produced

Honey butter	Answer
Honey jam	Answer
Total	Answer

(2) joint cost allocated based on weight

Honey butter	Answer
Honey jam	Answer
Total	Answer

(3) joint cost allocated based on sales value at split-off Note: Round proportions to the nearest whole percentage and dollar amounts to the nearest whole dollar.

Honey butter	Answer
Honey jam	Answer
Total	Answer

Requirement A Honey butter: NO incremental margin after split off point: $ 2 - $ 3 = - $ 1 Honey Jam: Yes,incremental margin after split offpoint: $ 7.2 - $ 4 = $ 3.2 Honey syrup: Yes, incremental margin after split off point: $ 0.6 - $ 0.4 = $ 0.2 Requirement Bl Joint cost: $ 197,120 - (1600*$3.2) = $ 192,000 Honey butter: $ 192,000* 16000/48000 = $ 64,000 Honey Jam:$ 192,000* 32000/48000= $ 128,000 Requirement B2 Joint allocation rate Honey butter: 16/24=66.67% Honey Jam: 8/24 = 33.33% Joint cost allocation as: Honey butter: $ 192,000*66.67% = $ 128,006.40 Honey Jam: $ 192,000* 33.33%= $ 63,993.60 Requirement B3 Sales value at splits off. Honey butter: 16,000*4 = $ 64,000 Honey Jam: 32,000*$ 6.4 = $ 204,800 Joint cost allocation as: Honey butter: $ 192,000* 64000/ 268800 = $ 45,714.29 Honey Jam: $ 192,000* 24800/268800 = $ 146.285.71