Question

Gordon’s Smoothie Stand makes three types of smoothies: blueberry lemon, orange swirl, and triple berry. Before all flavors are added, the smoothies go through a joint mixing process that costs a total of $43 per batch. One batch produces 21.75 cups of blueberry lemon smoothies, 29 cups of orange swirl smoothies, and 36.25 cups of triple berry smoothies. In addition, Gordon has studiously noted that the mixing process necessary for triple berry and blueberry lemon smoothies takes twice as long as it does for orange swirl smoothies. Allocate the joint costs of production to each product using the weighted average method.

Answer 1

Answer:

Let Blueberry lemon smoothies A

Let Orange swirl smoothies = B C

Let Triple berry smoothies = C

                                             Gordon’s Smoothie Stand      

Allocation of joint costs      

                                                                               A         B          C       Total

Number of cups produced A                            21.75   29.00   36.25  

Weight B                                                             2.00     1.00      2.00  

Weighted Number of cups produced C=A*B  43.50   29.00   72.50 145.00

Cost per batch D                                                                                     43.00

Cost/Weighted Number of cups produced E=D/C                                0.30

Cost allocated to each product F=C*E             12.90    8.60    21.50   43.00