Physical measure joint cost allocation
Illinois Soybeans operates a processing plant in which soybeans
are crushed to create soybean oil and soybean meal. The company
purchases soybeans by the bushel (59 pounds). From each bushel, the
normal yield is 14 pounds of soybean oil, 42 pounds of soybean
meal, and 3 pounds of waste. For March, Illinois Soybeans purchased
and processed 4,589,000 bushels of soybeans. The yield in March on
the soybeans was equal to the normal yield. The following costs
were incurred for the month:
At the end of March, there was no in-process or raw material in
inventory. Also, there was no beginning Finished Goods Inventory.
For the month, 80 percent of the soybean oil and 84 percent of the
soybean meal was sold.
a. Allocate the joint cost to the joint
products on the basis of pounds of product produced.
b. Calculate the cost of goods sold for
c. Calculate the cost of Finished Goods
Inventory at the end of March.