Penny's Pineapples Is a Pineapple Grower Joint Product Costs of Cultivating, Fertilizing and Picking Pineapples Total

Essay

Penny's Pineapples is a pineapple grower. After cultivating, fertilizing, growing, and picking pineapples, the company sells whole pineapples to food processors. The company is considering adding a processing line where sliced pineapples and pineapple juice, along with a "mash" used for animal feed will be the final products. Projected information about the costs follows:
$\begin{array}{ll}&&\text { Separable }&\text { Final selling price }\\\text { Product } & \text { Units produced } & \text {costs} & \text {per unit}\\\text { Sliced pineapple } & 900,000 \text { cans }&\$ 600,000 &\$ 3.00 \text {per can} \\\text { Pineapple juice } & 400,000 \text { bottles }&\$ 150,000& \$ 1.75 \text {per bottle} \\\text { Mash } & 500,000 \text { pounds }&\$ 120,000 & \$ 0.50 \text {per pound} \end{array}$

Joint product costs of cultivating, fertilizing and picking pineapples total $1,000,000.
Required:
(a) Determine the amount of joint costs allocated to each product using the net realizable value method.
(b) Determine the final cost per unit for each product.
(c) Determine the gross margin as a percent of sales for each product.
(d) A fertilizer manufacturer approaches Penny Martin, the President of the company, and asks to buy the rinds and other excess materials currently used to produce Mash. He would be willing to pay $0.30 per pound for these materials. What advice would you give Penny?