Question

Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Quality Chicken is computing the ending inventory values for its July​ 31, 2014​, balance sheet. Ending inventory amounts on July 31 are 20 pounds of​ breasts, 2 pounds of​ wings, 5 pounds of​ thighs, 6 pounds of​ bones, and 2 pounds of feathers.

Quality Chicken's management wants to use the sales value at splitoff method.​ However, management wants you to explore the effect on ending inventory values of classifying one or more products as a byproduct rather than a joint product.

	Breast	Wings	Thighs	Bones	Feathers	Total
Pounds of product	90	25	35	45	5	200
Wholesale selling price
per pound	$0.55	$0.30	$0.35	$0.05	$0.05
Sales value at splitoff	$49.50	$7.50	$12.25	$2.25	$0.25	$71.75
Weighting: Sales Value
at splitoff	0.690	0.105	0.171	0.031	0.003	1.000
Joint costs allocated	$27.60	$4.20	$6.84	$1.24	$0.12	$40.00
Allocated costs
per pound	$0.3067	$0.1680	$0.1954	$0.0276	$0.0240

1.	Assume Quality Chicken classifies all five products as joint products. What are the ending inventory values of each product on July​ 31, 2014​?
2.	Assume Quality Chicken uses the production method of accounting for byproducts. What are the ending inventory values for each joint product on July​ 31, 2014​,assuming breasts and thighs are the joint products and​ wings, bones, and feathers are​ byproducts?
3.	Comment on differences in the results in requirements 1 and 2.

Answer 1