Question

Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 22,000 pounds of apples is as follows: Grades Pounds Grade A 1,540 Grade B 5,500 Slices 7,700 Applesauce 7,260 Total 22,000 Total joint cost is $17,600. Required: 1. Allocate the joint cost to the four grades of apples using the physical units method.

Answer 1

Answer:

Apportioned joint cost

                               $

Graded A =       1,232

Grade B =        4,400

Slices  =            6,160

Applesauce = 5,808

Explanation:

The joint cost can be apportioned using the physical units basis by getting the sum of the units produced for all the different products, And then use the the proportion of individual units to the total units as basis for apportioning the joint cost.

Apportioned joint cost:

Total units= 22,000

Graded A - 1,540/22,000× 17,600 =  1232

Grade B - 5,500/22,000× 17,600= 4400

Slices  - 7,700/22,000× 17,600= 6,160

Applesauce- 7,260/22,000× 17,600 = 5,808

Apportioned joint cost

                               $

Graded A =       1232

Grade B =        4400

Slices  =            6,160

Applesauce = 5,808