Jackson Flocks Inc processes Turkeys into three products for

Jackson Flocks Inc. processes Turkeys into three 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 three products using:

Sales value at split-off method

Physical-measure method (volume in units)

NRV method

2. 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.

3.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.

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

Solution

Dear Student, There are 4 products here and 3 methods are there to split the common cost of $ 1000000 Products: Breasts, Smoked legs and thighs, whole turkey, neck and wings Methods for split off: 1) sales value 2) Physical measure method ( volume) 3) NRV method Computation of profit by using different split off methods 1) On the basis of sales value Particulars Breasts Smoked legd and thighs whole turkey neck and wings total Units 1000000 2500000 2000000 500000 6000000 Selling price per unit 2 4 3 5 Sales 2000000 10000000 6000000 2500000 20500000 Split off cost on the basis of sales 97560 487800 292680 121960 1000000 Cost after split off 200000 500000 425000 350000 1475000 Profit 1702440 9012200 5282320 2028040 18025000 2) On the basis of Volume Particulars Breasts Smoked legd and thighs whole turkey neck and wings total Units 1000000 2500000 2000000 500000 6000000 Selling price per unit 2 4 3 5 Sales 2000000 10000000 6000000 2500000 20500000 Split off cost on the basis of sales 166650 416675 333340 83335 1000000 Cost after split off 200000 500000 425000 350000 1475000 Profit 1633350 9083325 5241660 2066665 18025000 3) On the basis of NRV Particulars Breasts Smoked legd and thighs whole turkey neck and wings total Units 1000000 2500000 2000000 500000 6000000 Selling price per unit 2 4 3 5 Sales 2000000 10000000 6000000 2500000 20500000 Cost after split off 200000 500000 425000 350000 1475000 Profit before split off 1800000 9500000 5575000 2150000 19025000 split off cost 94612 499347 293033 113008 1000000 Profit after split off 1705388 9000653 5281967 2036992 18025000