Island Princess Pineapples Purchases Pineapples from Area Farmers and Processes

Essay

Island Princess Pineapples purchases pineapples from area farmers and processes them into rings, juice, and skins. The cost of the pineapples is a joint cost, as is the initial processing in which the fruits are skinned, cored, and sliced into rings. At the split-off point, Island Princess sells the skins for fertilizer. Juice and rings are processed further (further processing costs occurs for cooking and canning). Data for the three products follows: $$\begin{array}{l}\text { Sales }\\\begin{array} { l l } \text { Rings } & \$ 2,000 \\\text { Juice } & \$ 1,500 \\\text { Fertilizer } & \$ 400 \\\text { Further processing costs: } & \\\text { Rings } & \$ 500 \\\text { Juice } & \$ 300 \\\text { Joint costs } & \$ 1,600\end{array}\end{array}$$ A. Prepare a segmented income statement for Island Princess, showing results for rings, juice, fertilizer, and the total. Do not allocate joint costs individually.
B. Now suppose that Island Princess is considering the option of processing the skins further into pet food that would sell for $1,000. Additional costs would be $450. Should this be done?