Question - Peitro Processing produces fillet, smoked, and canned salmon in a single process. The same amount of disposal cost is incurred whether a product is sold as split-off or after further processing. In October 2008, the cost of the production process is $71,000.
Product Pounds Produced Separate Cost
Fillet 9,000 $1.50
Smoked 10,000 2.60
Remnants 1,000 0.75
Final Selling Price
$8.00
6.50
0.75
a. The remnants are considered a by-product of the process and are sold to cat food processors. Allocate the joint cost based on approximated net realizable value at split-off. Use the net realizable value method to account for the by-product.
b. Determine the value of ending Finished Goods Inventory, assuming that 8,000 pounds of salmon fillets, 9,400 pounds of smoked salmon, and 950 pounds of salmon remnants were sold. (Round cost per pound to the nearest penny.)