Harper Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 12,000 pounds of raw chicken that costs $7,000, the company produces two parts: 2,800 pounds of drumsticks and 4,200 pounds of breast for a processing cost of $2,450. The chicken breast is further processed into 3,200 pounds of steak for a processing cost of $2,000. The market price of drumsticks per pound is $1.25 and the market price per pound of chicken steak is $4.20. If Harper decided to sell chicken breast instead of chicken steak, the price per pound would be $2.20.

a1)

drumstink  3,780

breast        5,670

a2)

drumstink  (280)

breast       3,570

a3) it cannot be eliminated as it is a subproduct of the breast we cannot produce breast without also, produing the drumstink

b) joint-cost and gross margin considering market value as wat to allocate joint-cost

drumstink  2.596,15

breast  .853,85

gross margin

drumstink 903.85

breast    2,386.15

Questions:

a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base.

a-2. Calculate the gross margin for each product.

a-3. If the drumsticks are producing a loss, should that product line be eliminated?

b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base.

b-2. Calculate the gross profit for each product.

Explanation:

cost for the joint process:

7,000 raw materials + 2,450 conversion cost = 9,450

weights: 2,800 drumstiks  

              4,200 breast        

total       7,000

drumstink 9,450 x 2,800/7,000  = 3780

breast  9,450 x 4,200/7,000  = 5670

gross margin

drumstink 2,800 * 1.25  - 3,780=  (280)

breast 4,200 * 2.20  - 5,670 =     3,570

using market value as weight:

drumstink 2,800 * 1.25  =  3,500

breast 4,200 * 2.20       = 9,240

total sales value                12,740

drumstink 9,450 x 3,500/12,740  = 2.596,15

breast  9,450 x 9,240/12,740  = 6.853,85

gross margin

drumstink 3,500  - 2,596.15 = 903.85

breast 9,240  - 6,853.85 =   2,386.15

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

answer; o anticipate where news will happen;