Required 1. Determine last year’s unit cost for each product assuming Bean allocates joint production costs using: a. the physical measure method b. the NRV method. 2. The Bean Company assesses the division manager's performance based on the profitability of the product division. In your opinion, what method of joint cost allocation is preferred by the Quality manager? Explain. 3. Which of The Bean’s products should be processed further? Explain
The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional separable
beyond split-off. Joint production costs for the year were $90,000,000.
Sales values and costs needed to evaluate Bean’s production policy follow:
Premium Gourmet Quality Total
Pounds produced 10,000,000 12,000,000 2,000,000 24,000,000
Separble prcsing cost 9,000,000 7,000,000 5,000,000 21,000,000
Total Joint cost 90,000,000
Sals price split off $5 $4 $1
Sales price/pound - $7 $5 $2
( after additional processing)
Required
1. Determine last year’s unit cost for each product assuming Bean allocates joint production costs
using:
a. the physical measure method
b. the NRV method.
2. The Bean Company assesses the division manager's performance based on the profitability of the product division. In your opinion, what method of joint cost allocation is preferred by the Quality manager? Explain.
3. Which of The Bean’s products should be processed further? Explain
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