Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $13,000. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Further Processing Eventual Market Product Gallons Cost per Gallon Price per Gallon L-Ten 3,400 $0.50 $2.00 Triol 4,000 1.00 5.00 Pioze 2,600 1.50 6.00 Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. Total Revenue 42,400 V Total Costs Total Gross Profit 22,600 19,800 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar. Product L-Ten Joint Cost Allocation

Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $13,000. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Further Processing Eventual Market Product Gallons Cost per Gallon Price per Gallon L-Ten 3,400 $0.50 $2.00 Triol 4,000 1.00 5.00 Pioze 2,600 1.50 6.00 Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. Total Revenue 42,400 V Total Costs Total Gross Profit 22,600 19,800 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar. Product L-Ten Joint Cost Allocation

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 10CE: A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each...

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A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs 12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Required: 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. (Round the percentages to four significant digits. Round all cost allocations to the nearest dollar.) 2. What if it cost 2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products?
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $13,000. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Further Product Gallons Processing Cost per Gallon Eventual Market Price per Gallon $2.00 $0.50 L-Ten 3,600 1.00 5.00 Triol 4,000 1.50 6.00 Pioze 2,600 Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. Total Revenue $ Total Costs Total Gross Profit 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar. Product L-Ten Joint Cost Allocation $ Triol Pioze Total $ (Note: The joint cost allocation does not equal due to…
Allocating Joint Costs Using the Net Realizable Value Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,800. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Further Processing Eventual Market Product Gallons Cost per Gallon Price per Gallon L-Ten 3,700 $0.40 $2.10 Triol 4,200 1.10 4.80 2,000 1.60 6.50 Pioze Required: 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar. Grades L-Ten Triol Pioze Total Joint Cost Allocation 2. What if it cost $2.10 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products? Round your allocation percentages to four decimal places and round the allocated costs to the nearest…
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