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terry Company manufactures and sells yogurt-based products. Terry purchases milk products and processes them into Traditional...

terry Company manufactures and sells yogurt-based products. Terry purchases milk products and processes them into Traditional yogurt, Greek yogurt, and Drinkable yogurt. Terry’s production process involves first fermenting the milk into yogurt; all yogurt products go through this process, regardless of what end-product is to be made. For the last month, the joint costs of processing the milk into yogurt were $450,000. There was no beginning or ending inventories for the month. Production and sales value information for the month were as follows: Product Cases Sales Value at Split-Off Point (per case) Separable Costs (per case) Selling Price (per case) Traditional Yogurt 20,000 $9 $4 $18 Greek Yogurt 12,000 $13 $9 $24 Drinkable Yogurt 8,000 $15 $7 $21 REQUIRED: a) Assume that Terry uses the physical measure method to allocate joint costs. Calculate the total cost of each product last month, including the allocated joint costs. Do not round your percentages. Round dollar amounts to whole dollars (no decimals) (i.e. $99). b) Assume that Terry uses the sales value at splitoff method to allocate joint costs. Calculate the total cost of each product last month, including the allocated joint costs. Do not round your percentages. Round dollar amounts to whole dollars (no decimals) (i.e. $99). c) Assume that Terry uses the net realizable value method to allocate joint costs. Calculate the total cost of each product last month, including the allocated joint costs. Do not round your percentages. Round dollar amounts to whole dollars (no decimals) (i.e. $99).

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Expert Solution

Part a Allocation using Physical measure method
Traditional Yogurt Greek Yogurt Drinkable Yogurt
Units produced 20000 12000 8000
Joint cost of $450,000 allocated in ratio of 20:12:8 $225,000 $135,000 $90,000
Part b Allocation using Sales Value at split off method
Traditional Yogurt Greek Yogurt Drinkable Yogurt
Units produced 20000 12000 8000
Selling price at split off point $                                                              9 $                                             13 $                                              15
Sales value at split off point $180,000 $156,000 $120,000
Joint cost of $450,000 allocated in ratio of 180:156:120 $177,632 $153,947 $118,421
Part c Allocation using Net Realisable Value method
Traditional Yogurt Greek Yogurt Drinkable Yogurt
Units produced 20000 12000 8000
Final Selling price $                                                            18 $                                             24 $                                              21
Sales Value(Units produced*Final Selling price) $360,000 $288,000 $168,000
Separable Cost per unit $4 $9 $7
Separable Cost(Units produced*Separable Cost per unit) $80,000 $108,000 $56,000
NRV(Sales value-Separable costs) $280,000 $180,000 $112,000
Joint cost of $450,000 allocated in ratio of 280:180:112 $220,280 $141,608 $88,112

ekkarill92 answered 1 year ago
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