In: Accounting
Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 2018, the joint costs of processing the tomatoes were $420,000. There was no beginning inventory for the summer. Production and sales information for the summer is as follows:
Product |
Production (# of cases) |
Sales (# of cases) |
Sales Value at Splitoff Point |
Separable Costs |
Final Selling Price |
Catsup |
100,000 |
80,000 |
$6 per case |
$3.00 per case |
Catsup Premium $23 per case |
Juice |
150,000 |
120,000 |
8 per case |
5.00 per case |
Juice Premium $25 per case |
Canned |
200,000 |
150,000 |
5 per case |
2.50 per case |
Canned Premium $7.5 per case |
a. Determine the amount allocated to each product if the estimated net realizable value (NRV) method is used.
b. Compute the cost per case for each product.
c. Complete the following product-line partial income statement for each product (excel template is provided).
Product-line Income Statement by using NRV method |
Catsup |
Juice |
Canned |
Revenues |
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Cost of goods sold |
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Joint costs |
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Separable costs |
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Production costs |
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Deduct ending inventory |
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Cost of goods sold |
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Gross margin |
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Gross margin percentage |