Answer:
All-A-Buzz Company
a. The products that should processed beyond the split-off point are Honey jam and Honey syrup.
b. Allocation of Joint Cost
Honey butter Honey jam Honey syrup Joint Cost
Units produced $71,535 $143,071 $7,154 $221,760
Weight $109,850 $109,850 $2,060 $221,760
Sales value at split-off $51,874 $165,996 $3,890 $221,760
Explanation:
a) Data and Calculations:
Joint cost for the year = $221,760
Per Unit Incremental
Units of Weight Selling Price Processing Final Sales
Product Output at Split-Off Cost Price
Honey butter 18,000 16 4.00 $3.00 $6.00
Honey jam 36,000 8 6.40 4.00 14.00
Honey syrup 1,800 3 3.00 0.40 3.60
Total 55,800
Cost based on units = $3.97
Units produced:
Honey butter = $71,535 ($221,760 * 18,000/55,800)
Honey jam = $143,071 ($221,760 * 36,000/55,800)
Honey syrup = $7,154 ($221,760 * 1,800/55,800)
Weight:
Honey butter = 288,000 (18,000 * 16)
Honey jam = 288,000 (36,000 * 8)
Honey syrup = 5,400 (1,800 * 3)
Total weight = 581,400
Honey butter = $109,850 ($221,760 * 288,000/581,400)
Honey jam = $109,850 ($221,760 * 288,000/581,400)
Honey syrup = $2,060 ($221,760 * 5,400/581,400)
Sales value at split-off:
Honey butter = $72,000 (18,000 * $4.00)
Honey jam = $230,400 (36,000 * $6.40)
Honey syrup = $5,400 (1,800 * $3.00)
Total sales value at split-off = $307,800
Honey butter = $51,874 ($72,000/$307,800 * $221,760)
Honey jam = $165,996 ($230,400/$307,800 * $221,760)
Honey syrup = $3,890 ($5,400/$307,800 * $221,760)
