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Question - Processing beyond split off and cost allocations - All-A-Buzz makes three products from a joint production process using honey. Joint cost for the process for the year is $123,200.
Product
Units of Output
Per Unit Selling Price At Split-Off
Incremental Processing Cost
Final Sales Price
Honey butter
10,000
4.00
$3.00
$6.00
Honey jam
20,000
6.40
$4.00
$14.00
Honey syrup
1,000
3.00
$0.40
$3.60
Each container of honey butter, jam, and syrup, respectively, contains 16 ounces, 8 ounces, and 3 ounces of product.
1. Determine which products should be processed beyond the split off point.
2. Assume honey syrup should be treated as a by-product.
3. Allocate the joint cost based on units produced, weight, and sales value at split off. Use the net realizable value approach, assuming by-product revenues reduce joint production costs.
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