Tasty Brands Company manufactures candy from a joint production process and has four main products: Choco Bar, Nougat Bar, Peanut Bar, and Coconut Bar. Joint costs for one batch are as follows:
Direct materials $30,500
Direct labor 19,500
Overhead 22,000
Total joint costs $72,000
At the split-off point, one joint process batch yields 30,000 Choco Bars, 25,000 Nougat Bars, 20,000 Peanut Bars, and 15,000 Coconut Bars. If all products are sold at the split-off point, prices are $0.75 per Choco Bar, $1.00 per Nougat Bar, $1.25 per Peanut Bar, and $1.50 per Coconut Bar.
Tasty Brands has the option of further processing all products into king-sized bars with the following added costs and premium prices:
Added Cost King-sized Price
Choco Bar $18,000 $1.25 per bar
Nougat Bar $20,000 $1.75 per bar
Peanut Bar $22,000 $2.50 per bar
Coconut Bar $24,000 $3.25 per bar
What are the joint costs allocated to each bar under the physical units method? (4 pts)
What are the joint costs allocated to each bar under the NRV method? (4 pts)
What are the joint costs allocated to each bar under the sales value at split-off method? (4 pts)
Which candy bars should be processed further and why? (5.5 pts)