Question

1. Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans can be converted for an additional $200 into 500 pounds of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1 and soy oil can be sold in bulk for $4 per gallon. ISP can process the 500 pounds of soy meal into 600 pounds of soy cookies at an additional cost of $300. Each pound of soy cookies can be sold for $2 per pound. The 100 gallons of soy oil can be packaged at a cost of $200 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $25.

	Soy meal	Soy Oil	soy cookies	Soyola
Joint Cost	200$
Separable Costs			300$	200$
Production	500	100	600	400
Selling Price	1$	4$	2$	1.25$

1. Allocate the joint cost to the cookies and the Soyola using the following:

a. Sales value at splitoff method (Soy Meal & Soy Oil)

b. NRV method (Cookies & Soyola)

2. Should ISP have processed each of the products further?

Answer 1