Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would
Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would
Chapter1: Financial Statements And Business Decisions
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
Transcribed Image Text:Joint cost allocation; by-products
Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product.
Go-Go accounts for the by-product at the time of production through a reduction in joint product cost
of goods sold. The following information is available pertaining to annual sales and production:
Sales and production data:
Total production costs to split-off point $720,000
Gasoline sales
1,620,000
180,000
90,000
By-product sales
Gasoline inventory, December 31
Additional by-product costs:
Marketing
Production
$60,000
90,000
a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year.
Cost of sales for gasoline $
Cost of by-product $
b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would
the gross margin for the year change?
Gross margin would
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