FINS produces three products from its fish farm: fish, fish oil, and fish meal.
ID: 2428088 • Letter: F
Question
FINS produces three products from its fish farm: fish, fish oil, and fish meal. During July 2010, FINS produced the following average quantities of each product from each pound (16 ounces) of fish processed:Fish - 8 ounces
Fish oil - 4 ounces
Fish meal - 2 ounces
Total 14 ounces
Of each pound of fish processed, 2 ounces are waste. In July, FINS processed 37.5 tons of fish (1 ton equals 2,000 pounds). Joint cost amounted to $142,800. On average, each pound of product has the following selling prices: fish, $4.50; fish oil, $6.50; and fish meal, $2.
a. Allocate the joint cost using weight as the basis. Round interim percentages to the nearest whole number and your final answers to the nearest dollar.
Allocated Joint Cost
Fish $
Oil $
Meal $
b. Allocate the joint cost using sales value as the basis. Round interim percentages to the nearest whole number.
Allocated Joint Cost
Fish $
Oil $
Meal $
Explanation / Answer
Total quantity of fish processed 37.5 tons 1 ton o f fish` 2000 pounds Total quantity of fish processed in pounds=37.5*2000 75000 pounds Total quanity of fish processed in ounces=75000*16 1200000 ounces Fish production=1200000*8/16 600000 Fish oil production=1200000*4/16` 300000 Fish mealproduction=1200000*2/12 150000 wastage 1200000*2/12 150000 Joint cost $142,800 Allocation of joint cost using weight as the basis The ratio of weights=600000:300000:200000 Fish amount in joint cost=142800*6/11 $77,890.90 Fish oil amount in joint cost=142800*3/11 $38,945.45 Meal amount in joint cost=142800*2/11 $25,963.65 Allocation of joing cost using sale value as the basis sale value of fish $4.5 per pound sale of fish =600000/16*4.50 $168,750 Fish oil =300000/16*6.50 $121,875 Meal =150000/16*2` $18,750 Ratio of sales=168750:121875:18750 Fish amount in joint cost=142800*168750/309375 $77,890.90 Fish oil =142800*121875/309375 $56,254.54 Meal =142800*18750*309375 8654.56
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