Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Ploze, 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: Product L-Ten Triol Pioze Total Revenue. Gallons Product 3,500 4,000 2,500 Total Costs Total Gross Profit L-Ten Triol Pioze Further Processing Cost per Gallon 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. $ $0.50 40,800 X 22,400 ✓ 18,700 X 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. Joint Cost 1.00 $ 1.50 Eventual Market Price per Gallon $ 2.00 Allocation 5.00 2,042 X 6,831 X 6.00 Total $ (Note: The joint cost allocation does not equal $12,900 due to rounding.) 3. 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 these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Ploze, 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: Product L-Ten Triol Pioze Total Revenue. Gallons Product 3,500 4,000 2,500 Total Costs Total Gross Profit L-Ten Triol Pioze Further Processing Cost per Gallon 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. $ $0.50 40,800 X 22,400 ✓ 18,700 X 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. Joint Cost 1.00 $ 1.50 Eventual Market Price per Gallon $ 2.00 Allocation 5.00 2,042 X 6,831 X 6.00 Total $ (Note: The joint cost allocation does not equal $12,900 due to rounding.) 3. 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 these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Product Gallons
3,500
4,000
2,500
L-Ten
Triol
Pioze
Required:
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 $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:
Total Revenue
Total Costs
Total Gross Profit
Product
L-Ten
1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.
Triol
Pioze
Total
Product
L-Ten
Triol
Check My Work
Further Processing
Cost per Gallon
$0.50
1.00
W
$
S
https://studentcenter.uhcsr.com/p...
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.
1.50
40,800 X
22,400 ✓
$
18,700 X
Joint Cost
Allocation
2,042 X
6,831 X
(Note: The joint cost allocation does not equal $12,900 due to rounding.)
3. 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 these three products? Round the gross margin percentage to four decimal places and round all
other computations to the nearest dollar.
3
Joint Cost
Allocation
2,728 X
Eventual Market
Price per Gallon
$ 2.00
5.00
4,794 X
E
D
6.00
R
>
F
https://studentcenter.uhcsr.com/p...
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