# n. SW Flour Company buys 1 input of standard flour and refines it using a special sifting process…

n. SW Flour Company buys 1 input of standard flour and refines it using a special sifting process to 3 cups of baking flour and 9 cups of bread flour. In May 2017, SW bought 12,000 inputs of flour for \$89,000. SW spent another \$47,800 on the special sifting process. The baking flour can be sold for \$3.60 per cup and the bread flour for \$4.80 per cup. SW puts the baking flour through a second process so it is super fine. This costs an additional \$1.00 per cup of baking flour and the process yields ½ cup of super-fine baking flour for every one cup of baking flour used. The super-fine baking flour sells for \$9.60 per cup. Required: 1.       Allocate the \$136,800 joint cost to the super-fine baking flour and the bread flour using the following: a. Physical-measure method (using cups) of joint-cost allocation b. Sales value at splitoff method of joint-cost allocation c. NRV method of joint-cost allocation d. Constant gross-margin percentage NRV method of joint-cost allocation 2.        Each of these measures has advantages and disadvantages; what are they? 3.       Some claim that the sales value at splitoff method is the best method to use. Discuss the logic behind this claim.

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