Renke Inc. is in the corn-milling industry but to date has had only enough manufacturing space for one joint process. Renke refers to its two products as prime products and by-products. There is a market for both products, but, as the names imply, the prime products are what Renke got into business to sell, as the prime products' sales price far exceeds that of the by-products. In a typical production run, which costs $60,000, Renke Inc. produces the following products, which can be sold at the prices shown. Prime products By-products Quantity Produced 1,625 tons 875 tons Sales Price per Ton $50 $5 Because Renke's customers (the corn processors) count on purchasing top-quality raw material from Renke, it is important that the company maintains a steady amount of inventory. For this reason, Renke never completely sells out of its products. For the current production run, managers plan to sell 80% of each product immediately, holding 20% in inventory to carry into the next period.

Renke Inc. is in the corn-milling industry but to date has had only enough manufacturing space for one joint process. Renke refers to its two products as prime products and by-products. There is a market for both products, but, as the names imply, the prime products are what Renke got into business to sell, as the prime products' sales price far exceeds that of the by-products. In a typical production run, which costs $60,000, Renke Inc. produces the following products, which can be sold at the prices shown. Prime products By-products Quantity Produced 1,625 tons 875 tons Sales Price per Ton $50 $5 Because Renke's customers (the corn processors) count on purchasing top-quality raw material from Renke, it is important that the company maintains a steady amount of inventory. For this reason, Renke never completely sells out of its products. For the current production run, managers plan to sell 80% of each product immediately, holding 20% in inventory to carry into the next period.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 12E

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