Bramble Galore, a local orchard, grows and sells apples and apple pies. At harve
ID: 2431417 • Letter: B
Question
Bramble Galore, a local orchard, grows and sells apples and apple pies. At harvest time, apples are sorted into saleable apples and defective apples. The defective apples are considered a by-product and are sold as animal feed to local hog farmers. The saleable apples are sorted by size. The larger, visually appealing apples are sold as eating apples. The smaller apples could be sold as seconds or processed further into apple pies, which are then sold at farmers’ markets. Bramble Galore makes 4 pies from each bushel of apples. Joint costs for the apple orchard are $177,000.
Additional information is as follows:
Allocate the joint cost using the sales value at split-off point method.
Allocation Base Animal Feed Eating Seconds Pies Bushels of Apples 5,000 27,000 8,000 Sales value per bushel at harvest $2 $8 $5 Additional processing costs $10/pie Net Realizable Value $2 per bushel $8 per bushel $5 per bushel $160,000 per pieExplanation / Answer
Calculate joint cost :
Sale value at split off Ratio Allocation of joint cost Animal feed 5000*2 = 10000 3.76% 177000 6655 Eatings 27000*8 = 216000 81.20% 177000 143724 Seconds 8000*5 = 40000 15.04% 177000 26621 Total 266000 100% 177000