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Good Earth Products produce orange juice and candied orange peels. A 1,000 pound batch of oranges Costing $450 is transformed used labor $50 into 100 pounds of orange peels and 300 pints of juice. The company has determined that the sales value of 100 pounds of peels at the split off point is $350, and the sugar coating and packaging the 100 pounds of peels is $60. The cost of pasteurizing and packaging the 300 pints of juice is $200. A 100 pound box of candied peels is sold to commercial banking companies for $600 . Each pint of Juice is sold for $1.50.

Required:

A) Allocate joint costs using the relative sales values at the split off point and find out the profit per 100 pound box of sugar coated peels and the profit per pint of juice.

B) What is the incremental benefit (Cost) to the company of sugar coating the peels rather than selling them in their condition at the slit off point?

C) What is the incremental benefits (costs) to the company of pasteurizing and packaging a pint of juice rather than selling the juice at the split-off point?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M944889

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