Question

Sweet Bee Company specializes in manufacturing body care products. It manufactures two products: body lotion and hand cream. Both products use natural and organic ingredients. The main ingredient is the natural oil extracted from the calendula flower. Calendula flowers costing $93,500 are pressed and the natural oil is extracted. Then, the oil of the first press is used for the body lotion. The oil from the second press is used for the hand cream. A batch yields 2,000 tubes of body lotion and 3,500 tubes of hand cream. The costs of pressing and extracting amount to $17,000 per batch. The body lotion is then enhanced and packaged at a total cost of $2,000 and is sold for $45 per tube. The hand cream is further processed and packaged at a cost of $1.50 per tube and is sold for $20 per tube. In June, Sweet Bee, which had no opening inventory, processed one batch of calendula flowers. It sold 1,800 tubes of body lotion and 2,900 tubes of hand cream. Sweet Bee uses the net realizable value method for allocating joint production costs. Required: Calculate the cost of ending inventory for each of Sweet Bee’s products. (10 marks) If Sweet Bee were to use the constant gross margin percentage NRV method instead, how would it allocate its joint costs? Show your calculations. (5 marks) If Sweet Bee were to use the physical output method, how would it allocate its joint costs? Show your calculations. (2 marks)

          Sweet Bee Company specializes in manufacturing body care products. It manufactures two products: body lotion and hand cream. Both products use natural and organic ingredients. The main ingredient is the natural oil extracted from the calendula flower. Calendula flowers costing $93,500 are pressed and the natural oil is extracted. Then, the oil of the first press is used for the body lotion. The oil from the second press is used for the hand cream. A batch yields 2,000 tubes of body lotion and 3,500 tubes of hand cream. The costs of pressing and extracting amount to $17,000 per batch. The body lotion is then enhanced and packaged at a total cost of $2,000 and is sold for $45 per tube. The hand cream is further processed and packaged at a cost of $1.50 per tube and is sold for $20 per tube. In June, Sweet Bee, which had no opening inventory, processed one batch of calendula flowers. It sold 1,800 tubes of body lotion and 2,900 tubes of hand cream. Sweet Bee uses the net realizable value method for allocating joint production costs. Required: Calculate the cost of ending inventory for each of Sweet Bee’s products. (10 marks) If Sweet Bee were to use the constant gross margin percentage NRV method instead, how would it allocate its joint costs? Show your calculations. (5 marks) If Sweet Bee were to use the physical output method, how would it allocate its joint costs? Show your calculations. (2 marks)

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