in constant gross margin percentage method the overall gross profit ratio is calculated
use that gross profit margin ratio to allocate gross margin to product line and deduct it from sales to find out costs.
paper | card | Total | |
units sold | 120000[130000-10000] | 96000[108000-12000] | |
sale per unit | 2.75 | 3.50 | |
total sales | 330000 | 336000 | 666000 |
less: joint cost | (144000) | ||
less : separable cost | (488000) | ||
Gross profit | 34000 | ||
Gross profit ratio = gross profit/sales*100
=34000/666000*100
=5.105105%
sales | gross margin | gross profit | Total cost | separable cost | joint cost allocated | |
paper | 330000 | 5.105105% | 16847 | 313153[330000-16847] | 224000 | 89153[313153-224000] |
card | 336000 | 5.105105% | 17153 | 318847[336000-17153] | 264000 | 54847[318847-264000] |
income statment
paper | card | |
sales | 330000 | 336000 |
less: | ||
Allocated cost | 89153 | 54847 |
separable cost | 224000 | 264000 |
Gross profit | 16847 | 17153 |
Question 2 Using the Constant Gross Margin Percentage Method for Allocating Joint Costs Green Paper Company...
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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 batch of the three products is as follows: Product Gallons Further Processing Cost per Gallon $0.50 Eventual Market Price per Gallon L-Ten $2.00 Triol 3,700 4,000 2,300 1.00 5.00 Pioze 1.50 6.00 Required: 1....
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 batch of the three products is as follows: Product Gallons Further Processing Cost per Gallon Eventual Market Price per Gallon L-Ten 3,500 $0.50 $ 2.00 Triol 4,000 1.00 5.00 Pioze 2,500...
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Constant gross margin percentage NRV method applies the following steps: a) 1) compute overall gross margin percentage; 2) compute total production costs for each product; 3) compute allocated joint costs b) 1) compute overall sales value; 2) compute total production cost for each product; 3) compute allocated joint costs c) 1) COMPUTE OVERALL NRV; 2) compute total production costs for each product 3) compute allocated joint costs d) none of these
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