Reference no: EM132760932

Problem - Buzzy Bee, Inc., produces three types of honey: pure, maple cinnamon, and peach almond. All three types of honey go through a joint production process that costs a total of $240 per batch. After the split-off point, both maple cinnamon and peach almond honey go through an additional flavoring production process, whereas pure honey is immediately sold for $3 per jar. One batch produces 100 jars of pure honey, 60 jars of maple cinnamon honey, and 40 jars of peach almond honey. The additional processing of the maple cinnamon honey costs $30 per batch after which it is sold for $3.75 per jar. The additional processing of the peach almond honey costs $40 per batch, after which it is sold for $4.25 per jar.

Required -

1. Find the joint production cost to be allocated to each type of honey using the physical units method.

2. Find the joint production cost to be allocated to each type of honey using the net realizable value method.

3. Which of the two methods provides more accurate costing of the different types of honey?