Question

Walton Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 23,000 pounds of raw chicken that costs $15,600, the company produces two parts: 4,000 pounds of drumsticks and 6,000 pounds of breast for a processing cost of $3,384. The chicken breast is further processed into 5,200 pounds of steak for a processing cost of $3,200. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $5.20. If Walton decided to sell chicken breast instead of chicken steak, the price per pound would be $2.60.

Required

1. a-1. Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base.

   Required A1 Required A2 Required A3 Required B1 Required B2 Required C1 Required C2 Allocate the joint cost to the joint products, drumsticks and breasts, using weight as the allocation base. (Round "Allocation rate" to 2 decimal places.) Product Drumsticks Chicken breast Total allocated cost Allocation Rate x Weight of BaseAllocated Cost

Answer 1

a-1.

Product	Allocation Rate	x	Weight of Base	=	Allocated Cost
Drumsticks	1.90		4,000		$ 7,600
Chicken Breast	1.90		6,000		11,400
Total Allocated Cost					$ 19,000

Allocation Rate = ( Cost of Raw Chicken + Processing Costs) / Total Weight of Output = $ ( 15,600 + 3,384 ) / ( 4,000 + 6,000) = 1.8984