Question Description
Jackson Flocks Inc. processes Turkeys into four products for sale on the wholesale market:
Breasts
Smoked legs and thighs
Whole Turkeys
Necks and wings for soup
The costs to get the products to the point where they can be separately identified total $10,000,000. Additional Information follows:
|
Product |
Lbs. Produced |
Cost after split-off |
Selling price per pound |
|
Breasts |
1,000,000 |
$200,000 |
$2 |
|
Smoked legs and thighs |
2,500,000 |
500,000 |
4 |
|
Whole Turkeys |
2,000,000 |
425,000 |
3 |
|
Necks and wings |
500,000 |
350,000 |
5 |
Feathers are sold at the split-off point as a by-product for $1,000,000 which lower the joint costs allocated.
Based on the information given for Jackson Flocks:
- allocate the joint processing costs to the four products using:
- Sales value at split-off method
- Physical-measure method (volume in units)
- NRV method
- Prepare an analysis for Jackson Flocks that compares processing the smoked legs and thighs further, as it currently does, with selling them as a product immediately at split-off.
- Assume Jackson flocks announced that in six months it will sell the legs and thighs at split-off due to increasing competitive pressure. Identify at least three types of likely behavior that will be demonstrated by the skilled labor in the brining and smoking process as a result of this announcement. Include in your discussion how this behavior could be influenced by management.
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