Question

In: Accounting

Allocating Joint Costs Using the Weighted Average Method Orchard Fresh, Inc., purchases apples from local orchards...

Allocating Joint Costs Using the Weighted Average Method

Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning.

Information on a recent purchase of 20,000 pounds of apples is as follows: Assume that Orchard Fresh, Inc., uses the weighted average method of joint cost allocation and has assigned the following weights to the four grades of apples:

Grades Pounds Weight
Factor
Grade A 1,800 4.0   
Grade B 5,000 2.0   
Slices 8,000 1.0   
Applesauce 5,200 0.5   
Total 20,000

Total joint cost is $19,000.

Required:

1. Allocate the joint cost to the four grades of apples using the weighted average method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.

Joint Cost
Grades Allocation
Grade A $fill in the blank 1
Grade B fill in the blank 2
Slices fill in the blank 3
Applesauce fill in the blank 4
Total $fill in the blank 5

(Note: The joint cost allocation does not equal $19,000 due to rounding.)

2. What if the factory found that Grade A apples were being valued less by customers and decided to decrease the weight factor for Grade A apples to 3.0? How would that affect the allocation of cost to Grade A apples? How would it affect the allocation of cost to the remaining grades? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.

Joint Cost
Grades Allocation
Grade A $fill in the blank 6
Grade B fill in the blank 7
Slices fill in the blank 8
Applesauce fill in the blank 9
Total $fill in the blank 10

(Note: The joint cost allocation does not equal $19,000 due to rounding.)

Solutions

Expert Solution

Requirement 1:

Allocate joint costs using weighted average method :

Apple Grades Pounds Weight Factor Weighted Pounds Percent Joint Cost Joint Cost Allocation
(a) (b) (a) × (b) (c) (d) (c) × (d)
Grade A 1800 4.0 7200 25.8993% $19,000 $4921
Grade B 5000 2.0 10000 35.9712% $19,000 $6834
Slices 8000 1.0 8000 28.7770% $19,000 $5468
Apple Sauce 5200 0.5 2600 9.3525% $19,000 $1777
Total 20,000 27,800 1.0000 $19,000

Working Note:

Grade A: (7200 ÷ 27800) *100

Grade B: (10,000 ÷ 27800)*100

Slices: (8,000 ÷ 27800)*100

Apple Sauce (2600÷ 27800)*100

Requirement 2:

Allocate joint costs using weighted average method

Apple Grades Pounds Weight Factor Weighted Pounds Percent Joint Cost Joint Cost Allocation
(a) (b) (a) × (b) (c) (d) (c) × (d)
Grade A 1800 3.0 5400 20.7692% $19000 $3946
Grade B 5000 2.0 10,000 38.4615% $19000 $7308
Slices 8000 1.0 8,000 30.7692% $19000 $5846
Apple Sauce 5200 0.5 2600 1.0000% $19000 $1900
Total 20,000 26000 99.9999% $19,000

Related Solutions

Allocating Joint Costs Using the Weighted Average Method Orchard Fresh, Inc., purchases apples from local orchards...
Allocating Joint Costs Using the Weighted Average Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards...
Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples...
Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and...
Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for...
Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and...
Allocating Joint Costs Using the Sales-Value-at-Split-Off Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for...
25. Assigning Costs to Products: Weighted Average Method. Sydney, Inc., uses the weighted average method for...
25. Assigning Costs to Products: Weighted Average Method. Sydney, Inc., uses the weighted average method for its process costing system. The Assembly department at Sydney, Inc., began April with 6,000 units in work-in-process inventory, all of which were completed and transferred out during April. An additional 8,000 units were started during the month, 3,000 of which were completed and transferred out during April. A total of 5,000 units remained in workin- process inventory at the end of April and were...
Transferred-in costs, weighted-average method.
Transferred-in costs, weighted-average method. Publish, Inc. has two departments: Printing and Binding. Each department has one direct-cost category (direct materials) and one indirect-cost category (conversion costs). This problem focuses on the Binding Department Books that have undergone the printing process are immediately transferred to the Binding Department Direct material is added when the binding process is 80% complete. Conversion costs are added evenly during binding operations. When those operations are done, the books are immediately transferred to Finished Goods. Publish...
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol,...
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Product Gallons Further Processing Cost per Gallon Eventual Market Price per Gallon L-Ten 3,500 $0.50    $ 2.00    Triol 4,000 1.00       5.00    Pioze 2,500...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT