Old Virginia Meat Processing Plant Processes Hogs to Produce Three

question 101

Essay

Old Virginia Meat Processing Plant processes hogs to produce three joint products: bacon,sausage,and pork chops.The company incurs common processing costs of $100,000 per batch.Each batch yields 15,000 pounds of bacon,18,000 pounds of sausage,and 7,000 pounds of pork chops.Pork chops can be sold for $3.00 per pound.The bacon and sausage products are sold at the split-off point for $3.25 per pound and $3.50 per pound,respectively.
Required:
1)Allocate Old Virginia's joint costs using pounds produced as the allocation base.(Do not round intermediate calculations.)
2)Allocate Old Virginia's joint costs using the relative sales value at split-off method.(Do not round intermediate calculations.)
3)Assume that the pork chops are processed further after the split-off point at an additional cost of $4,000 and that joint costs are allocated based on pounds produced.What would be the total cost assigned to pork chops?

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Definitions:

Crossover Point

The crossover point is the moment when two or more alternatives have the same value or cost, often used in financial analysis to determine when an investment will start to be profitable.

Initial Investment

Initial investment refers to the amount of money invested in a project, asset, or business venture at the start.

Crossover Rate

The point at which two projects have the same net present value (NPV), used in capital budgeting to determine the rate of return at which an investor would be indifferent between the two projects.

Mutually Exclusive

Situations or decisions that cannot occur or be made simultaneously because the occurrence of one excludes the possibility of the other.