Problem 1 - Red Sauce Canning Company processes tomatoes into catsup, tomato jui

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.

Explanation / Answer

Cost Allocation:

Cost per case

Catsup

132,631.58

1.33

Juice

176,842.11

1.18

Juice

110,526.32

0.55

420,000.00

Cost Allocation:

Cost per case

Catsup

132,631.58

1.33

Juice

176,842.11

1.18

Juice

110,526.32

0.55

420,000.00

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