Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) Product Units Weight per Unit (lbs) Final Sales Value Further Processing Costs Sales Value at Split-Off B752 15 90,000 $420 $200 $230 B797 25 110,000 480 260 310 If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation? Question options: a) $214.26 million. b) $215 million. c) $220 million. d) $214.50 million.

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) Product Units Weight per Unit (lbs) Final Sales Value Further Processing Costs Sales Value at Split-Off B752 15 90,000 $420 $200 $230 B797 25 110,000 480 260 310 If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation? Question options: a) $214.26 million. b) $215 million. c) $220 million. d) $214.50 million.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 4CMA: Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in...

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Hsu Company manufactures two products (A and B) from a joint process that cost $330,000 for the year just ended. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Further information follows. Product Pounds Produced Per-Pound Sales Price If Processed Further Sales Value Separable Cost A 40,000 $ 12 $ 410,000 $ 120,000 B 60,000 8 320,000 70,000 If the joint costs are allocated based on the physical-units method, what would be the amount of joint cost assigned to product A?
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