Question

Joint cost allocation

Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is twice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process.

1. Using the physical units method, allocate the joint costs of production to each product. Round your answers to two decimal places.

Joint Product	Roses per Harvest	Proportion	Joint Costs	Allocation
Red roses		%	$	$
White roses		%
Peach roses		%
Totals				$

2. Using the weighted average method, allocate the joint costs of production to each product. Round your answers to two decimal places.

Joint Product	Roses per Harvest	Weight Factor	Weighted Roses of Fertilizer	Weighted Percent of Fertilizer	Joint Costs	Allocation
Red roses				%	$	$
White roses				%
Peach roses				%
Totals						$

3. Is the cost of the type of fertilizer required by each type of rose a good weight factor?

The cost of the type of fertilizer required by each type of rose may be a good weight factor, if fertilizer is   cost of the joint production process.

Answer 1

1.

Joint product	Roses per harvest	Proportion	Joint costs	Allocation
Red roses	80	0.40	$          110	$        44.00
White roses	70	0.35		$        38.50
Peach roses	50	0.25		$        27.50
Total	200	1		$      110.00

2.

Joint product	Roses per harvest	Weight factor	Wieghted roses of fertilizer	Weighted percent of fertilizer	Joint costs	Allocation
Red roses	80	1	80	0.32	$        110	$        35.20
White roses	70	1	70	0.28		$        30.80
Peach roses	50	2	100	0.40		$        44.00
Total	200		250	1		$      110.00

Note : The above weight factors are based on the cost of the fertilizer required by each type of rose.

3.  The cost of the type of fertilizer required by each type of rose may be a good weight factor, if fertilizer is cost of the joint production process.

Thank you.