Rundle Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 16,000 pounds of raw chicken that costs $8,800, the company produces two parts: 4,000 pounds of drumsticks and 5,400 pounds of breast for a processing cost of $7,805. The chicken breast is further processed into 4,600 pounds of steak for a processing cost of $2,600. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $4.60. If Rundle decided to sell chicken breast instead of chicken steak, the price per pound would be $2.50. Required a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. a-2. Calculate the gross profit for each product. a-3. If the drumsticks are producing a loss, should that product line be eliminated? b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base. b-2. Calculate the gross profit for each product. c-1. Should Rundle further process chicken breasts into chicken steak? (Use the assumption made in requirement b-1). c-2. How would the profit be affected by your answer in c-f? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req A3 Req B1 Req B2 Req C1 Req C2 Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. Note: Round "Allocation rate" to 2 decimal places. Product Drumsticks Chicken breast Total allocated cost Allocation Rate x Weight of Base Allocated Cost
Rundle Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 16,000 pounds of raw chicken that costs $8,800, the company produces two parts: 4,000 pounds of drumsticks and 5,400 pounds of breast for a processing cost of $7,805. The chicken breast is further processed into 4,600 pounds of steak for a processing cost of $2,600. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $4.60. If Rundle decided to sell chicken breast instead of chicken steak, the price per pound would be $2.50. Required a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. a-2. Calculate the gross profit for each product. a-3. If the drumsticks are producing a loss, should that product line be eliminated? b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base. b-2. Calculate the gross profit for each product. c-1. Should Rundle further process chicken breasts into chicken steak? (Use the assumption made in requirement b-1). c-2. How would the profit be affected by your answer in c-f? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req A3 Req B1 Req B2 Req C1 Req C2 Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. Note: Round "Allocation rate" to 2 decimal places. Product Drumsticks Chicken breast Total allocated cost Allocation Rate x Weight of Base Allocated Cost
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 4BE
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Rundle Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes
them into two different products: chicken drumsticks and chicken steak. From a standard batch of 16,000 pounds of raw chicken that
costs $8,800, the company produces two parts: 4,000 pounds of drumsticks and 5,400 pounds of breast for a processing cost of
$7,805. The chicken breast is further processed into 4,600 pounds of steak for a processing cost of $2,600. The market price of
drumsticks per pound is $1.75 and the market price per pound of chicken steak is $4.60. If Rundle decided to sell chicken breast
instead of chicken steak, the price per pound would be $2.50.
Required
a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base.
a-2. Calculate the gross profit for each product.
a-3. If the drumsticks are producing a loss, should that product line be eliminated?
b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base.
b-2. Calculate the gross profit for each product.
c-1. Should Rundle further process chicken breasts into chicken steak? (Use the assumption made in requirement b-1).
c-2. How would the profit be affected by your answer in c-f?
Complete this question by entering your answers in the tabs below.
Req A1
Req A2
Req A3
Req B1
Req B2
Req C1
Req C2
Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base.
Note: Round "Allocation rate" to 2 decimal places.
Product
Drumsticks
Chicken breast
Total allocated cost
Allocation Rate x Weight of Base
Allocated Cost
<ReqA1
Req A1
Req A2 >
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