Suppose that one hog yields 250 pounds of ham, 200 pounds of chops, and 50 pounds of miscellaneous items. The sales value of ham is $1.80 per pound; chops, $2.50 per pound; and miscellaneous items, $1.00 per pound. The hog costs $670, and processing costs are $30.Required:A. Determine the proper allocation of joint costs to the three products by using the physical-units method.B. Repeat part "B" by using the relative-sales-value method.
What will be an ideal response?
| A. | Weight at the Split-off Point | Relative Proportion | Allocation of Joint Cost* |
| Ham | 250 pounds | 25/50 | $350 |
| Chops | 200 pounds | 20/50 | 280 |
| Miscellaneous items | 50 pounds | 5/50 | 70 |
| ? | 500 pounds | ? | $700 |
| * $670 + $30 | ? | ? | ? |
| B. | Sales Value at Split-off | Relative Proportion | Allocation of Joint Cost |
| Ham (250 × $1.80) | $450 | 4.5/10 | $315 |
| Chops (200 × $2.50) | 500 | 5.0/10 | 350 |
| Miscellaneous items (50 × $1.00) | 50 | 0.5/10 | 35 |
| ? | $1,000 | ? | $700 |
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