Problem

During March 2013, the first month of operations, Oink Oink's Pork Co. had the operating statistics shown in the following table. Products Weight in Pounds Sales Value at Split-Off Pounds Produced Pounds Sold Tenderloin 8,600 $132,000 6,440 Roast 13,400 86,000 16,740 Ham 10,800 22,400 8,640 Hooves 4,600 4,600 9,200 Costs of the joint process were direct material, $40,000; direct labor, $23,400; and overhead, $10,000. The company's main products are pork tenderloin, roast pork, and ham; pork hooves are a by-product of the process. The company recognizes the net realizable value of by-product inventory at split-off by reducing total joint cost. Neither the main products nor the by-product requires any additional processing or disposal costs, although management could consider additional processing. a. Calculate the ending inventory values of each joint product based on (1) relative sales value and (2) pounds. (Round to nearest whole percentage.) b. Discuss the advantages and disadvantages of each allocation base for (1) financial statement purposes and (2) decisions about the desirability of processing the joint products beyond the split-off point.