Reference no: EM13940479

Good Earth Products produces orange juice and candied orange peels. A 1,000-pound batch of oranges, costing $520, is transformed using the labor of $40 into 110 pounds of orange peels and 320 pints of juice. The company has determined that the sales value of 110 pounds of peels at the split-off point is $340, and the value of a pint of juice (not pasteurized or bottled) is $0.4. Beyond the split-off point, the cost of sugar-coating and packaging the 110 pounds of peels is $70. The cost of pasteurizing and packaging the 320 pints of juice is $250. An 110-pound box of candied peels is sold to commercial banking companies for $580. Each pint of juice is sold for $1.69.

(a).Allocate joint costs using the relative sales values at the split-off point, and calculate the profit per 110-pound box of sugar-coated peels and the profit per pint of juice. (Round profit per pint of juice to 2 decimal places, e.g. 15.25 and other answers to 0 decimal places, e.g. 5,725. Round intermediate  calculations to 4 decimal places, e.g. 0.6254.)

Allocation of joint costs to sugar-coated peels		$
Allocation of joint costs to juice		$
Profit per 110-pound box of sugar-coated peels		$
Profit per pint of juice		$

(b) What is the incremental benefit (cost) to the company of sugar-coating the peels rather than selling them in their condition at the split-off point?

The incremental benefit (cost)

$_____________

(c). What is the incremental benefit (cost) to the company of pasteurizing and packaging a pint of juice rather than selling the juice at the split-off point? (Round answer to 2 decimal places, e.g. 15.25.)

The incremental benefit (cost)

$