Suppose That One Hog Yields 200 Pounds of Ham, 75

question 50

Essay

Suppose that one hog yields 200 pounds of ham, 75 pounds of chops, and 25 pounds of miscellaneous items. The sales value of each of the products is as follows: $\begin{array} { l l } \underline{\text { Product } }& \underline{\text { Sales Value Per Pound }} \\\text { Ham } & \$ 1.20 \\\text { Chops } & \$ 2.00 \\\text { Miscellaneous items } & \$ 0.40\end{array}$ The hog costs $550. Processing costs are $40.
Required:
A. Determine the proper allocation of joint costs to the three products by using the physical-units method.
B. Repeat part "B" by using the relative-sales-value method.

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Definitions:

Total Revenue Variance

The difference between the actual total revenue earned and the expected total revenue in a period.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the quantity purchased.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost multiplied by the actual hours worked.

Actual Quantity

The real amount of materials, labor, or overhead used in production or service delivery, as opposed to budgeted or standard quantities.