The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans. The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional separable processing costs, as shown next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $90,000,000. Sales values and costs needed to evaluate Bean’s production policy follow: Required 1. Determine last year’s unit cost for each product assuming Bean allocates joint production costs using: a. the physical measure method b. the NRV method. 2. The Bean Company assesses the division manager's performance based on the profitability of the product division. In your opinion, what method of joint cost allocation is preferred by the Quality manager? Explain. 3. Which of The Bean’s products should be processed further? Explain
The Bean Company provides fresh coffee beans for restaurants, hotels, and other food service companies. Bean offers three types of coffee beans: Premium, Gourmet, and Quality. Each of the three coffees is produced in a joint process in which beans are cleaned and sorted. The sorting process is the split-off point in this joint process, and the output is the three types of beans.
The beans can be sold at the split-off point or processed further, with different types of roasting and additional sorting. The additional processing requires additional separable
next. Separable processing requires no special facilities, and the production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed
beyond split-off. Joint production costs for the year were $90,000,000.
Sales values and costs needed to evaluate Bean’s production policy follow:
Required
1. Determine last year’s unit cost for each product assuming Bean allocates joint production costs using:
a. the physical measure method
b. the NRV method.
2. The Bean Company assesses the division manager's performance based on the profitability of the product division. In your opinion, what method of joint cost allocation is preferred by the Quality manager? Explain.
3. Which of The Bean’s products should be processed further? Explain
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