Question: Georgette Rheingold owns and operates a fruit smoothie manufacturing operation

Georgette Rheingold owns and operates a fruit smoothie manufacturing operation, Nutri-smoothie. She processes fruit and adds it to yogurt and produces fruit smoothies, the main product. She sells the rinds and waste to a recycling organization that turns it into compost. Neither product requires processing after the split-off point. Information for last month’s operations follows:
Joint costs of smoothie production ....... $12,000
Smoothie production (in pint bottles) ...... 20,000
Price per bottle .............. $2
Sales last month (bottles) .......... 18,000
Compost production ............ 10,000 lbs
Compost sales ............... 9,000 lbs
Compost price per pound ........... $0.25

REQUIRED
A. What is Nutri-smoothie’s gross margin for last month if the by-product value is recognized at the time of production?
B. What is Nutri-smoothie’s gross margin for last month if the by-product value is recognized at the time of sale?
C. Calculate the inventory value for both smoothies and compost on the balance sheet under the methods used in parts (A) and (B).



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  • CreatedJanuary 26, 2015
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