Answer:
Chicken drumsticks:
pounds 6,600 - 7,230.22 = -630,22
market value: 6,600 - 5,478 = 1,122
Breast:
pounds 13,000 - 9037,88 = 3,962.12
market value: 13,000 - 10.790 = 2,210.00
Changing the allocation method detemriantes whether the drumstick are profitable or not thus, it should be considered which method is better suited.
Explanation:
Joint cost:
9,400 mateirals + 6,868 processing Total =
pounds to allocate cost:
![\left[\begin{array}{cccc}Product&Sales&Weight&Cost\\Drumstick&4000&0.44&7230.22\\Breast&5000&0.56&9037.8\\\\Total&9000&1&16268\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7DProduct%26Sales%26Weight%26Cost%5C%5CDrumstick%264000%260.44%267230.22%5C%5CBreast%265000%260.56%269037.8%5C%5C%5C%5CTotal%269000%261%2616268%5C%5C%5Cend%7Barray%7D%5Cright%5D)
using market value:
![\left[\begin{array}{cccc}Product&Sales&Weight&Cost\\Drumstick&6600&0.3367&5478\\Breast&13000&0.6633&10790\\\\Total&19600&1&16268\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7DProduct%26Sales%26Weight%26Cost%5C%5CDrumstick%266600%260.3367%265478%5C%5CBreast%2613000%260.6633%2610790%5C%5C%5C%5CTotal%2619600%261%2616268%5C%5C%5Cend%7Barray%7D%5Cright%5D)
Then, we calcualte the gross margin under each method
Chicken drumsticks:
pounds 6,600 - 7,230.22 = -630,22
market value: 6,600 - 5,478 = 1,122
Breast:
pounds 13,000 - 9037,88 = 3,962.12
market value: 13,000 - 10.790 = 2,210.00