Reference no: EM132661913
A vegetable processor that purchases vegetables from local farmers.
The majority of its processing capacity is devoted to broccoli.
A typical month of processing consists of buying 10,000 kilograms of broccoli at a cost of $0.55 per kilogram.
The broccoli then goes through the following processes:
Cutting $ 7,000
Sorting 2,500
Cleaning 14,000
Total $ 23,500
Product yields and average selling price per kilogram are as follows:
Fresh broccoli crowns
KG. Selling price Additional processing Yield (Tetra Paks) Selling price per Tetra Pak
6,000 $2.85
Frozen broccoli
KG. Selling price Additional processing Yield (Tetra Paks) Selling price per Tetra Pak
2,500 $2.10
Grade B broccoli
KG. Selling price Additional processing Yield (Tetra Paks) Selling price per Tetra Pak
1,000 $5,500 3,000 $4.80
Total KG (6000+2500+1000) = 9,500
- 500 kg of the purchased product is waste and cannot be sold.
- Grade B broccoli is made into broccoli soup and sold in Tetra Paks.
- The cost of this additional processing is $5,500, and each package can be sold for $4.80.
Problem 1: Using the net realizable method, how much of the joint costs should be allocated to the broccoli soup?