Mike's Meats incurs costs of $4,000 while processing raw chicken meat into three products: breasts, wings, and thighs. The meat is then sold to local grocery stores based on the following.
|
Sales Price per lb
|
Quantity produced (lbs)
|
|
Breast
|
$2.00
|
3,000
|
|
Wings
|
$0.50
|
1,000
|
|
Thighs
|
$1.00
|
2,000
|
Required;
- Determine the cost and gross profit percentage for each type of chicken using the physical units method of joint cost allocation.
- Repeat partusing the sales-value-at-split-off method of joint cost allocation.
- The company has an opportunity to sell wings to local restaurants for $1.00 per pound but additional packaging is required, which will cost $300 per 1,000 lb. Assuming the physical unit method is used to allocate joint costs, should the offer be accepted?