Explore BrainMass

Explore BrainMass

    Important information about Cost allocation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See attached document for explanation of problem.

    Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X5, the joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:

    Product Cases Sales Value
    at Splitoff Point Separable Costs Selling Price
    Catsup 100,000 $6 per case $3.00 per case $28 per case
    Juice 150,000 8 per case 5.00 per case 25 per case
    Canned 200,000 5 per case 2.50 per case 10 per case

    Required:
    Determine the amount allocated to each product if the estimated net realizable value method is used, and compute the cost per case for each product.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:51 pm ad1c9bdddf
    https://brainmass.com/business/accounting/important-information-about-cost-allocation-155869

    Attachments

    Solution Preview

    Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X5, the joint costs of processing the tomatoes were $420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:

    Product Cases Sales Value
    at Splitoff Point Separable Costs Selling ...

    Solution Summary

    The solution explains the allocation of joint costs using the net realizable value method

    $2.19

    ADVERTISEMENT