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OBJECT CORNE Cornerstone Exercise 7.7 Allocating Joint Costs Using the Physical Units Method Orchard Fresh, Inc., purchases apples from local orchards and sorts them into four categories. Grade A are large blemish-free apples that can be sold to gourmet fruit sellers. Grade B apples are smaller and may be slightly out of proportion. These are packed in boxes and sold to grocery stores. Apples for slices are even smaller than Grade B apples and have blemishes. Apples for applesauce are of lower grade than apples for slices, yet still suitable for canning. Information on a recent purchase of 20,000 pounds of apples is as follows: Grades Pounds Grade A 1,600 Grade B 5,000 Slices 8,000 Applesauce 5,400 Total 20,000 Total joint cost is $18,000. Required: 1. Allocate the j 2. Allocate th allocate the joint cost to the four grades of apples using the physical units method. (Carry out the percent calculations to four significant digits.) ocate the joint cost to the four grades of apples by finding the average joint cost per and multiplying it by the number of pounds in the grade. (Round all cost allocations pound and multiplying to the nearest dollar.) 3. What if there we would that affect th tion of cost to the remaini there were 2.000 pounds of Grade A apples and 4,000 pounds of Grade B? How tallect the allocation of cost to these two grades? How would it affect the alloca o the remaining common grades? - Heina the Weighted Average Method OBJECTIVE E

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