Gem Potato Processors – Joint Costs
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Gem
Potato Processors produces three products: fries, nuggets and crunchy peels.
They are all made from a cull potatoes they purchase from sorting sheds. Follow
is information about each product.
Fries Nuggets Peelings
Pounds Produced 50,000 40,000 10,000
Pounds Sold at
Retail Point 45,000 35,000 10,000
Sales Price at Split-off $3.00 $2.00 $1.00
Retail Sales Price $5.00 $4.00 $1.00
Separate Costs $50,000 $20,000 $0
Joint Costs before
Split-off Point is $200,000.
Required:
- Allocate the
joint costs using the NRV method. - Allocate the
joint costs using the physical units method. - What is the
other acceptable method used to allocate joint costs? - Which is the
best method and why?
