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:
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:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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:
Product |
Gallons | Further Processing Cost per Gallon |
Eventual Market Price per Gallon |
| L-Ten | 3,700 | $0.50 | $2.00 |
| Triol | 4,000 | 1.00 | 5.00 |
| Pioze | 2,300 | 1.50 | 6.00 |
See screenshots for needed information. I am having trouble with some of it.
Transcribed Image Text:Product
Allocation
L-Ten
2,137
Triol
6,777 X
Pioze
3,986 x
Total
12,900 X
(Note: The joint cost allocation does not equal due to rounding.)
3. What if it cost $2.00 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.
Joint Cost
Product
Allocation
L-Ten
2,856
Triol
4,718
Pioze
5,326 X
Total
12,900 x
(Note: The joint cost allocation does not equal due to rounding.)
Transcribed Image Text: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 ba
the three products is as follows:
Further Processing
Eventual Market
ITT
Product
Gallons
Cost per Gallon
Price per Gallon
L-Ten
3,700
$0.50
$2.00
Triol
4,000
1.00
5.00
Pioze
2,300
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
41,200 V
Total Costs
22,200 V
Total Gross Profit
19,000 V
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
Product
Allocation
L-Ten
2,137 V
r 777
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