Carol is looking back at her work from last year, when she allocated the company's key process
Question:
Carol is looking back at her work from last year, when she allocated the company's key process costs to its three products. She knows that the company has historically used the NRV method joint costs. Unfortunately, the printout that she has of the final allocations and supporting detail is only partially legible. You see, Steven accidentally set the sprinklers off in the office last week, and Carol's printout was recipient of most of that water. Here is a replication of what she could see from the printout; she noted missing information with lowercase roman numerals.
Ah | Bay | Say | Total | |
Units produced (available) at split-off point | 380 | 190 | 380 | 950 |
Sales value per unit at split-off point | $8 | $6 | $4 | (v) |
Units produced (available) after further processing | (i) | 325 | 380 | (vi) |
Final sales value per unit after further processing | $12 | (iii) | $10 | (vii) |
Further processing costs | $2,800 | $600 | (iv) | $4,200 |
Allocated joint costs | (ii) | $940 | $1,410 | $4,700 |
(a) Fill in the missing details for each product.
Ah | Bay | Say | Total | |
Units produced (available) at split-off point | 380 | 190 | 380 | 950 |
Sales value per unit at split-off point | $8 | $6 | $4 | $6 |
Units produced (available) after further processing | 650 | 325 | 380 | 1,355 |
Final sales value per unit after further processing | $12 | $8 | $10 | $30 |
Further processing costs | $2,800 | $600 | $800 | $4,200 |
Allocated joint costs | $2,350 | $940 | $1,410 | $4,700 |
(b) If Carol's company had instead used the physical quantities method for allocating joint costs, how different would the allocated costs have been for each product?
Ah | Bay | Say | |
Difference in allocated joint cost | $470 | $0 | $(470) |
(c1) Under the existing NRV method, which product has the highest gross margin percentage assuming all quantities available after further processing are sold for the given price?
Ah | Bay | Say | |
Gross margin ration | % | % | % |
Product has the highest gross margin percentage.
If the physical quantities methos is used, which product has the highest gross margin percentage (again, assuming all quantities available are sold for the given price after further processing)?
Ah | Bay | Say | |
Gross margin ration | % | % | % |
Product has the highest gross margin percentage.