Rabito, Inc., is a large food-processing company. It processes 152,000 pounds of peanuts in the peanuts department at a cost of $183,000 to yield 12,000 pounds of product A, 72.000 pounds of product B, and 15,000 pounds of product C.
The company wants to make a gross margin of 10% of revenues on product C and needs to allow 20% of revenues for marketing costs on product C overview of operations follows:
Requirements
1. Compute unit costs per pound for products A, B, and C, treating C as a byproduct. Use the NRV method for allocating joint costs. Deduct the NRV of the byproduct produced from the joint cost of products A and B
2. Compute unit costs per pound for products A, B, and C, treating all three as joint products and allocating joint costs by the NRV method