rationale ror ul ai 10.2 (Joint process decision making; writing) Bethany Lutrel
ID: 2578034 • Letter: R
Question
rationale ror ul ai 10.2 (Joint process decision making; writing) Bethany Lutrell's uncle has asked to take over the family poultry processing plant. Provide Lutrell, who graduated in the following issues: engineering, answers to a. What are the important questions to be answered about joint processes in a poultry processing plant? Also indicate the po should be answered. ints in a joint process at which these questions b. How should joint costs be used in managerial decision making When and why might a joint cost be used inappropriately in decision making? c. How are joint process outputs similar and dissimilar? allecations) Indianola Beef buys sides of beef to con-Explanation / Answer
Answer to Question 1
Important questions related to Poultartyprocessing business are :
1. Are the revenues more than expenses to be incurred for basket of goods?
2. Will the benifit from using this facility exceed benifit provided by the best alternative available?
These should be answered before the joint process has started
3. How to classify joint process outputs? It should be answered at Decision Point 3
4. Whether to sell the joint product at split off or process it further? It should be answered at Decision Point 4
These should be answered at split off point
Answer to Part B
Joint cost includes all cost incurred like direct material, direct labour and overhead which has been incurred upto the point of joint production. Joint cost should be taken to be an important aspect in managerial decision making as it is necessary to cost the product and examine whether it should be processed further or not.
When the management is not able to decide whether the product is to be classified as joint product or not and it is to be further used or not, concept of joint cost would be used inappropriately.
Answer to Part C
Based upon relative sales values of outputs, Joint process output is classied by management’s judgment. Classications are unique to each company. For example, assume that Companies X and Y are both poultry processors. Company X might classify whole chickens and breast meat as joint products and all other chicken parts as by-product, whereas Company Y might classify whole chickens, thighs, legs, and wings as joint prod-ucts and all other chicken parts as by-product. This is based upon the market and the facilities scale of X and Y
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