Summerfield 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. (C. M. A. 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 measures method, assuming that Quicksnackis accounted for as a by-product, with its sales revenue accounted for as "other revenue. "
(c) Compute Summerfield Food's gross margin under requirements a and b.

Question

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The Answer of Summerfield 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. (C. M. A. 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 measures method, assuming that Quicksnackis accounted for as a by-product, with its sales revenue accounted for as "other revenue. "
(c) Compute Summerfield Food's gross margin under requirements a and b.

Summerfield Foods Produces Three Supplemental Food Products Simultaneously Through a Refining