Question

Problem 7-48 Joint Products; By-Products (Appendix) [LO 7-6, 7-7] The Marshall Company has a joint production process that produces two joint products and a by-product. The joint products are Ying and Yang, and the by-product is Bit. Marshall accounts for the costs of its products using the net realizable value method. The two joint products are processed beyond the split-off point, incurring separable processing costs. There is a $1,300 disposal cost for the by- product. A summary of a recent month's activity at Marshall is shown below: Units sold Units produced Separable processing costs-variable Separable processing costs-fixed Sales price Ying 65,000 65,000 $182,000 $ 13,000 $ 6.00 Yang 52,000 52,000 $ 55,000 $10,000 $ 12.50 Bit 13,000 13,000 $ - $ - $ 1.50 Total joint costs for Marshall in the recent month are $188,200, of which $80,926 is a variable cost. Required: 1. Calculate the manufacturing cost per unit for each of the three products. (Round manufacturing cost per unit answers to 2 decimal places.) 2. Calculate the total gross margin for each product. Ying Yang Bit Manufacturing cost per unit Total gross margin

Answer 1

Manufacturing Cost PU:	Ying	Yang	Bit		Manufacturing Cost Total:	Ying	Yang	Bit
Per Unit Separable Cost	3.00	1.25	-		Separate Processing-Variable	182,000	55,000
Joint Cost Allocation PU	0.72	2.71			Separate Processing-Fixed	13,000	10,000
Disposal Cost			0.10		Total	195,000	65,000	-
Total Manufacturing Cost	3.72	3.96	0.10		Unit Product	65,000	52,000
					Per Unit Separable Cost	3.00	1.25	#DIV/0!
	Ying	Yang	Bit
Sales	6.00	12.50	1.50
Less: Total Manufacturing Cost	3.72	3.96	0.10		Net Realizable Cost:	Ying	Yang
Gross Margin	2.28	8.54	1.40		Sales Price	6.00	12.50
					Less:
					Per Unit Separable Cost	3.00	1.25
					NRV PU	3.00	11.25
					Units	65,000	52,000
					Net Realizable Cost	195,000	585,000	780,000
					Joint Costs	188,200
					Net Realizable Cost	780,000
					Net Realizable Allocation	Ying	Yang
					Joint Cost Allocation	47,050	141,150
					Unit Product	65000	52000
					Joint Cost Allocation PU	0.72	2.71