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

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.

Solution

joint cost before sale of feathers = 10000000