Solved: Fredericksburg Vegetable is a fruit packing

business The firm b

Fredericksburg Vegetable is a fruit packing business The firm b

Fredericksburg Vegetable is a fruit-packing business. The firm buys peaches by the truckload in
season and separates them into three categories: premium, good, and fair. Premium peaches
can be sold as is to supermarket chains and to specialty gift stores. Good peaches are sliced
and canned in light syrup and sold to supermarkets. Fair peaches are considered a by-product
and are sold to Altas Company, which processes the peaches into jelly.
Fredericksburg Vegetable has two processing departments:
(1) Cleaning and Sorting (joint cost)
(2) Cutting and Canning (separate costs).
During the month, the company paid $15,000 for one truckload of fruit and $700 for labor to sort
the fruit into categories. Fredericksburg Vegetable uses a predetermined overhead rate of 40
percent of direct labor cost. The following yield, costs, and final sales value resulted from the
month's truckload of fruit.

a. Determine the joint cost.

b. Diagram Fredericksburg Vegetable's process in a manner similar to Exhibits 11-5 and 11-10.
c. Allocate joint cost using the approximated net realizable value at split-off method, assuming
that the by-product is recorded when realized and is shown as Other Income on the income
statement.
d. Using the allocations from (c), prepare the necessary entries assuming that the by-product is
sold for $4,500 and that all costs were as shown.
e. Allocate joint cost using the approximated net realizable value at split-off method, assuming
that the by-product is recorded using the net realizable value approach and that the joint cost is
reduced by the net realizable value of the by-product.
f. Using the allocations from (d), prepare the necessary entries, assuming that the estimated
realizable value of the by-product is$4,000.

Fredericksburg Vegetable is a fruit packing business The firm b

ANSWER
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