Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B applesare smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples forapplesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 20,000 pounds of apples is as follows:Grades PoundsGrade A 1,600Grade B 5,000Slices 8,000Applesauce 5,400Total 20,000 Total joint cost is $18,000.Required:1. Allocate the joint cost to the four grades of apples using the physical units method. (Carryout the percent calculations to four significant digits.)2. Allocate the joint cost to the four grades of apples by finding the average joint cost perpound and multiplying it by the number of pounds in the grade. (Round all cost allocationsto the nearest dollar.)3. What if there were 2,000 pounds of Grade A apples and 4,600 pounds of Grade B? How would that affect the allocation of cost to these two grades? How would it affect the alloca-tion of cost to the remaining common grades?
Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples
are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for
applesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 20,000 pounds of apples is as follows:
Grades Pounds
Grade A 1,600
Grade B 5,000
Slices 8,000
Applesauce 5,400
Total 20,000
Total joint cost is $18,000.
Required:
1. Allocate the joint cost to the four grades of apples using the physical units method. (Carry
out the percent calculations to four significant digits.)
2. Allocate the joint cost to the four grades of apples by finding the average joint cost per
pound and multiplying it by the number of pounds in the grade. (Round all cost allocations
to the nearest dollar.)
3. What if there were 2,000 pounds of Grade A apples and 4,600 pounds of Grade B? How
would that affect the allocation of cost to these two grades? How would it affect the alloca-
tion of cost to the remaining common grades?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
