# Product A is processed further in the salting department at a cost of \$27,000. It yields 12,000 pounds ofsalted peanuts, which are sold for \$12 per pound.Product B (raw peanuts) is sold without further processing at \$3 per pound.Product C is considered a byproduct and is processed further in the paste department at a cost of\$12,000. It yields 16,000 pounds of peanut butter, which are sold for \$6 per pound.The company wants to make a gross margin of 10% of revenues on product C and needs to allow 20% ofrevenues for marketing costs on product C. An overview of operations follows:- Separable Costs -Joint Costs\$180,000Salting DepartmentProcessing\$27,000Salted Peanuts12,000 pounds12,000pounds\$12/lbRaw PeanutsPeanuts DepartmentProcessingof 150,000 lb65,000pounds\$3/lbPeanut ButterPaste DepartmentProcessing16,00016,000 poundspounds\$6/lb\$12,000SplitoffPoint 1. Compute unit costs per pound for products A, B, and C, treating Cas a byproduct. Use the NRV method forallocating joint costs. Deduct the NRV of the byproduct produced from the joint cost of products A and B.2. Compute unit costs per pound for products A, B, and C, treating all three as joint products and allocat-ing joint costs by the NRV method.Required

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Joint costs and byproducts. (W.Crum adapted) Royston,Inc., is a large food processing company. It processes 150,000 pounds of peanuts department at a cost of \$180,000 to yield 12,000 pounds of product A, 65,000 pounds of product B, and 16,000 pounds of product C.

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Step 1

Joint products:

Joint products are several products which are produced from a common production process up to the point of split-off

By products:

By products are the products which are produced unintentionally along with the main product. By products have lower value than the primary product manufactured in the same process.

Net realizable value (NRV) method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Step 2

1. compute the unit cost per pound for products A, B and C, if C is by-product:

Step 3

Conclusion:

Hence, the unit costs per pound of Product A, B and C is computed ...

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