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Assuming again that all quantities are sold, calculate gross margin for the division if Grade 2 is further processed into Grade 3 and the NRV method is used to allocate joint cos Gross margin S Grade 1 Grade 2/3

Assuming again that all quantities are sold, calculate gross margin for the division if Grade 2 is further processed into Grade 3 and the NRV method is used to allocate joint cos Gross margin S Grade 1 Grade 2/3

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assuming again that all quantities are sold, calculate gross margin for the division if Grade 2 is further processed into Grade 3 and the NRV method is used to allocate joint cos Gross margin $ Grade 1 $ Grade 2/3
Transcribed Image Text:Assuming again that all quantities are sold, calculate gross margin for the division if Grade 2 is further processed into Grade 3 and the NRV method is used to allocate joint cos Gross margin $ Grade 1 $ Grade 2/3
As the manager of the granite-crushing division, George has just recently started evaluating product profitability. The joint process for his division generates Grade 1 and Grade 2 granite pieces. Both grades at this point can be sold as-is, or Grade 2 can be processed further into Grade 3 (a stabilizer is added while it's further processed into very fine pieces). The quantities, costs, and sales values for the different grades of product are as follows. Joint processing costs Quantity of Grade 1 product at split-off Quantity of Grade 2 product at split-off Sales value of Grade 1 at split-off Sales value of Grade 2 at split-off Cost to further process Grade 2 Final sales value of Grade 3 $64,000 39.000 cubic yards 19,500 cubic yards per cubic yd per cubic yd $1 $2 $14.625 $73,125
Transcribed Image Text:As the manager of the granite-crushing division, George has just recently started evaluating product profitability. The joint process for his division generates Grade 1 and Grade 2 granite pieces. Both grades at this point can be sold as-is, or Grade 2 can be processed further into Grade 3 (a stabilizer is added while it's further processed into very fine pieces). The quantities, costs, and sales values for the different grades of product are as follows. Joint processing costs Quantity of Grade 1 product at split-off Quantity of Grade 2 product at split-off Sales value of Grade 1 at split-off Sales value of Grade 2 at split-off Cost to further process Grade 2 Final sales value of Grade 3 $64,000 39.000 cubic yards 19,500 cubic yards per cubic yd per cubic yd $1 $2 $14.625 $73,125
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