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.
2) Allocate Old Virginia's joint costs using the relative sales value at split-off method.
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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