Question

In: Accounting

Jackson Flocks Inc. processes Turkeys into three products for sale on the wholesale market: Breasts Smoked...

Jackson Flocks Inc. processes Turkeys into three products for sale on the wholesale market:

Breasts
Smoked legs and thighs
Whole Turkeys
Necks and wings for soup

The costs to get the products to the point where they can be separately identified total $10,000,000. Additional Information follows:

Product

Lbs. Produced

Cost after split-off

Selling price per pound

Breasts

1,000,000

$200,000

$2

Smoked legs and thighs

2,500,000

500,000

4

Whole Turkeys

2,000,000

425,000

3

Necks and wings

500,000

350,000

5

Feathers are sold at the split-off point as a by-product for $1,000,000 which lower the joint costs allocated.

Based on the information given for Jackson Flocks:

allocate the joint processing costs to the three products using:

Sales value at split-off method

Physical-measure method (volume in units)

NRV method

Prepare an analysis for Jackson Flocks that compares processing the smoked legs and thighs further, as it currently does, with selling them as a product immediately at split-off.

Assume Jackson flocks announced that in six months it will sell the legs and thighs at split-off due to increasing competitive pressure. Identify at least three types of likely behavior that will be demonstrated by the skilled labor in the brining and smoking process as a result of this announcement. Include in your discussion how this behavior could be influenced by management.

Solutions

Expert Solution

joint cost before sale of feathers = 10000000

joint cost 10000000
less sale of feathers 1000000
net joint cost 9000000
product units cost s.price/unit sales value= units * SP NRV = sales value - cost after split
breasts 1000000 200000 2 2000000 1800000
smoked legs 2500000 500000 4 10000000 9500000
turkeys 2000000 425000 3 6000000 5575000
necks and wings 500000 350000 5 2500000 2150000
allocation methd breast smoked legs turkeys neck and wings total
sales value 2000000 10000000 6000000 2500000 20500000
split of cost=                  sale value*jointcost/total sale value 87804.87805 439024.3902 263414.6341 109756.0976 900000
physical methodi.e units 1000000 2500000 2000000 500000 6000000
split of cost 150000 375000 300000 75000 900000
nrv 1800000 9500000 5575000 2150000 19025000
split of cost 85151.11695 449408.6728 263731.9317 101708.2786 900000

ekkarill92 answered 2 years ago
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