Problem 1 - Red Sauce Canning Company processes tomatoes into catsup, tomato jui
ID: 2351564 • Letter: P
Question
Problem 1 - Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X2, the joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:Product
Cases
Sales Value at Splitoff Point
Separable Costs
Selling Price
Catsup
100,000
$6 per case
$3.00 per case
$28 per case
Juice
150,000
8 per case
5.00 per case
25 per case
Canned
200,000
5 per case
2.50 per case
10 per case
Question: Determine the amount allocated to each product if the estimated net realizable value method is used, and compute the cost per case for each product. (10 points)
Explanation / Answer
Product
Cases
Sales Value at Splitoff Point
Separable Costs
Selling Price
Catsup
100,000
$6 per case
$3.00 per case
$28 per case
Juice
150,000
8 per case
5.00 per case
25 per case
Canned
200,000
5 per case
2.50 per case
10 per case
19
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Cost Allocation:
Cost per case:
Catsup
$ 132,631.58
$ 1.33
Juice
$ 176,842.11
$ 1.18
Canned
$ 110,526.32
$ 0.55
$ 420,000.00
Product
Cases
Sales Value at Splitoff Point
Separable Costs
Selling Price
Catsup
100,000
$6 per case
$3.00 per case
$28 per case
Juice
150,000
8 per case
5.00 per case
25 per case
Canned
200,000
5 per case
2.50 per case
10 per case
19
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