Chapter 16, Problem 16.27E

Joint-cost allocation, sales value, physical measure, NRV methods. Tasty Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which Tasty dumps at negligible costs in a local drainage area. In June 2017, the following data were reported for the production and sales of beef-flavored and shrimp-flavored ramen:

Due to the popularity of its microwavable products, Tasty decides to add a new line of products that targets dieters. These new products are produced by adding a special ingredient to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. Following are the monthly data for all the products:

1. 1. Calculate Tasty’s gross-margin percentage for Special B and Special S when joint costs are allocated using the following:

  Required

1. a. Sales value at splitoff method
2. b. Physical-measure method
3. c. Net realizable value method