Good Earth Products produces orange juice and candied orange peels. A 1,000-poun

Question

Good Earth Products produces orange juice and candied orange peels. A 1,000-pound batch of oranges, costing $490, is transformed using jg of $50 into 110 pounds of orange peels and 290 pints of juice. The company has determined that the sales value of 110 pounds of peels at the split-of point is $340, and the value of a pint of juice (not pasteurized or bottled) is $0.5. Be the split-off point, the cost of sugar-coating and packaging the 110 pounds of peels is $70. The cost of pasteurizing and packaging the 290 pints of juice is $250. A 1l0-poundbox of candied peels is sold to commercial baking companies for $620. Each pint of juice is sold for $1.78. Profit per 1 10-pound box of sugar-coated peels $7 Profit per pint of juice $7

Explanation / Answer

Cost per pound of oranges = 490 / 1,000 = $0.49per pound

1. Joint cost allocated to sugar-coated peels = 110 x 0.49 = $53.9

2. Joint cost allocated to juice = 490 - 53.9 = $436.1

3. Profit per 110-pound box of sugar-coated peels = 620 - 70 - 53.9 = $496.1

Pernpound profit(if required) = 496.1 / 110 = $4.51 per pound

4. Total profit in pint of juice = (1.78 x 290) - 250 - 436.1 = -$169.9(loss)
Loss per pint = 169.9 / 2 = -$0.59

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