Chapter 19, Problem 4PB

Joint cost allocation

Rosie’s Roses produces three colors of roses: red, white, and peach. The roses are produced jointly in the same garden, and aggregately cost a total of $110 per harvest. One harvest produces 80 red roses, 70 white roses, and 50 peach roses. Rosie also noted that the peach roses require a fertilizer that is m ice as expensive as the fertilizer required by the white and red roses. However, due to the structure of the shared garden space, the more expensive fertilizer is used for all flower types in a joint production process.

Instructions

1. 1. Using the physical units method, allocate the joint costs of production to each product.
2. 2. Using the weighted average method, allocate the joint costs of production to each product.
3. 3. Is the cost of the type of fertilizer required by each type of rose a good weight factor?