Joint-cost allocation, insurance settlement Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2009 is: Wholesale Selling Price per Pound
Parts Pound of Product When Production Is Complete
Joint cost of production in July 2009 was $50.
A special shipment of 40 pounds of breasts and 15 pounds of wings has been destroyed in a fire. Quality Chicken’s insurance policy provides reimbursement for the cost of the items destroyed. The insurance company permits Quality Chicken to use a joint-cost-allocation method. The splitoff point is assumed to be at the end of the production process.
1. Compute the cost of the special shipment destroyed using the following:
a. Sales value at splitoff method.
b. Physical-measure method (pounds of finished product).
2. What joint-cost-allocation method would you recommend Quality Chicken use? Explain.

Question Completion:

                  Sales Qty        Sales

                in Pound (A)   Rate (B)

Breasts           100            $0.55

Wings              20              $0.20

Thighs             40              $0.35  

Bones             80              $0.10    

Feathers          10              $0.05

Quality Chicken

1. The cost of the special shipment destroyed using the following:

a. Sales value at splitoff method:

Product Line cost of the special shipment destroyed

                                  Breasts      Wings       Total

Qty Lost

(in Pound)                       40             15            55

Joint cost Per Pound  $0.34     $0.12

Cost of destroyed     $13.50      $1.84       $15.34

b. Physical-measure method (pounds of finished product):

Product Line cost of the special shipment destroyed

                                  Breasts      Wings       Total

Qty Lost

(in Pound)                       40             15            55

Joint cost Per Pound  $0.20     $0.20

Cost of destroyed       $8.00      $3.00      $11.00

2. The sales value at split-off method is recommended.  It assess different inventories according to their relative market values instead of their historical costs.

Explanation:

a) Data and Calculations:

                  Sales Qty     Sales    Sales value  Joint Cost

                   in Pound      Rate    at Split-off      Allocated

Breasts           100          $0.55      $55.00      $33.74 ($55/$81.50) * $50

Wings              20            $0.20          4.00          2.45 ($4/$81.50) * $50

Thighs             40            $0.35         14.00          8.59 ($14/$81.50) * $50  

Bones             80            $0.10            8.00          4.91 ($8/$81.50) * $50  

Feathers          10           $0.05           0.50          0.31 ($0.50/$81.50) * $50  

Total            250                              $81.50    $50.00

           Joint Cost

          Per Pound

Breasts    $0.34 ($33.74/100)

Wings       $0.12 ($2.45/20)

Thighs     $0.21 ($8.59/40)

Bones     $0.06 ($4.91/80)

Feathers $0.03 ($0.31/10)

Product Line cost of the special shipment destroyed

                                  Breasts      Wings       Total

Qty Lost

(in Pound)                       40             15            55

Joint cost Per Pound  $0.34     $0.12

Cost of destroyed     $13.50      $1.84       $15.34

Physical-Measure Method:

                            Breasts    Wings    Thighs     Bones    Feathers     Total

Qty in Pound                  100          20          40            80             10           250

Allocation of joint cost $20         $4         $8          $16          $2          $50

Weights                          40%        8%       16%         32%         4%        100%

Cost per unit               $0.20     $0.20   $0.20      $0.20      $0.20

Cost of Product destroyed:

Breasts = $8 ($0.20 * 40)

Wings =   $3 ($0.20 * 15)

Total =     $11

the answer should be demonstrations i hope this

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.