Wholesale Selling Price per Pound When Production Is Complete Parts Pounds of Product Breasts 100 $0.55 Wings Thighs 20 0.20 40 0.35 Bones 80 0.10 Feathers 10 0.05 Joint cost of production in July 2017 was $50. A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire. Qual- ity Chicken's insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is assumed to be at the end of the production process. 1. Compute the cost of the special shipment destroyed using the following: a. Sales value at splitoff method b. Physical-measure method (pounds of finished product) Required 2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.

Wholesale Selling Price per Pound When Production Is Complete Parts Pounds of Product Breasts 100 $0.55 Wings Thighs 20 0.20 40 0.35 Bones 80 0.10 Feathers 10 0.05 Joint cost of production in July 2017 was $50. A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire. Qual- ity Chicken's insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is assumed to be at the end of the production process. 1. Compute the cost of the special shipment destroyed using the following: a. Sales value at splitoff method b. Physical-measure method (pounds of finished product) Required 2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Joint-cost allocation, insurance settlement. Quality Chicken grows and processes chickens. Each chicken is disassembled into ve main parts. Information pertaining to production in July 2017 is as follows:

Wholesale Selling Price per Pound When
Production Is Complete
Parts
Pounds of Product
Breasts
100
$0.55
Wings
Thighs
20
0.20
40
0.35
Bones
80
0.10
Feathers
10
0.05
Joint cost of production in July 2017 was $50.
A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire. Qual-
ity Chicken's insurance policy provides reimbursement for the cost of the items destroyed. The insurance
company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is assumed to be
at the end of the production process.
1. Compute the cost of the special shipment destroyed using the following:
a. Sales value at splitoff method
b. Physical-measure method (pounds of finished product)
Required
2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.

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