Jackson Flocks Inc. processes Turkeys into three products for sale on the wholesale market:
Breasts
Smoked legs and thighs
Whole Turkeys
Necks and wings for soup
The costs to get the products to the point where they can be separately identified total $10,000,000.
Additional Information follows:
|
Product
|
Lbs. Produced
|
Cost after split-off
|
Selling price per pound
|
|
Breasts
|
1,000,000
|
$200,000
|
$2
|
|
Smoked legs and thighs
|
2,500,000
|
500,000
|
4
|
|
Whole Turkeys
|
2,000,000
|
425,000
|
3
|
|
Necks and wings
|
500,000
|
350,000
|
5
|
Feathers are sold at the split-off point as a by-product for $1,000,000 which lower the joint costs allocated.
Based on the information given for Jackson Flocks:
1. allocate the joint processing costs to the three products using:
a. Sales value at split-off method
b. Physical-measure method (volume in units)
c. NRV method
2. Prepare an analysis for Jackson Flocks that compares processing the smoked legs and thighs further, as it currently does, with selling them as a product immediately at split-off.
3. Assume Jackson flocks announced that in six months it will sell the legs and thighs at split-off due to increasing competitive pressure. Identify at least three types of likely behavior that will be demonstrated by the skilled labor in the brining and smoking process as a result of this announcement. Include in your discussion how this behavior could be influenced by management.