Bartoff Foods produces three supplemental food products simultaneously through a refining process costing $186,000. The joint products, Bulkup and Bodybuilder, have a final selling price of $8 per pound and $10 per pound, respectively, after additional processing costs of $2 per pound for each product incurred after the split-off point. Quicksnack, a by-product, is sold at the split-off point for $6 per pound. The production of Bulkup results in 20,000 pounds with a caloric value of 6,000 calories per pound. The production of Bodybuilder, which is very high in carbohydrates, has a caloric value of 12,500 calories per pound. 10,000 pounds of Bodybuilder are produced. Quicksnack has a caloric value of 2,000 calories a pound and 2,000 pounds are produced. (CMA adapted)
Required:
(a) Allocate the joint product costs using the net-realizable-value method, assuming that Quicksnack is accounted for as a by-product, with its net realizable value deducted from the cost of the main products.
(b) Allocate the joint product costs using the physical quantities method, assuming that Quicksnack is accounted for as a by-product, with its sales revenue accounted for as "other revenue." Bartoff uses calories per pound as the physical measurement.
(c) Compute Bartoff Food's gross margin under requirements (a) and (b).

Question

Quizplus · Accepted Answer

The Answer of Bartoff Foods produces three supplemental food products simultaneously through a refining process costing $186,000. The joint products, Bulkup and Bodybuilder, have a final selling price of $8 per pound and $10 per pound, respectively, after additional processing costs of $2 per pound for each product incurred after the split-off point. Quicksnack, a by-product, is sold at the split-off point for $6 per pound. The production of Bulkup results in 20,000 pounds with a caloric value of 6,000 calories per pound. The production of Bodybuilder, which is very high in carbohydrates, has a caloric value of 12,500 calories per pound. 10,000 pounds of Bodybuilder are produced. Quicksnack has a caloric value of 2,000 calories a pound and 2,000 pounds are produced. (CMA adapted)
Required:
(a) Allocate the joint product costs using the net-realizable-value method, assuming that Quicksnack is accounted for as a by-product, with its net realizable value deducted from the cost of the main products.
(b) Allocate the joint product costs using the physical quantities method, assuming that Quicksnack is accounted for as a by-product, with its sales revenue accounted for as "other revenue." Bartoff uses calories per pound as the physical measurement.
(c) Compute Bartoff Food's gross margin under requirements (a) and (b).

Bartoff Foods Produces Three Supplemental Food Products Simultaneously Through a Refining