CH9-Q7-A) Chris owns a small sheet metal business. He produces three different types of sheet metal. Their
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CH9-Q7-A)
Chris owns a small sheet metal business. He produces three different types of sheet metal. Their sizes are similar, but they have different degrees of flexibility. Costs are allocated based on the sales value at split-off point method. Additional information for March production follows:
| Very | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Stiff | Flexible | Flexible | Total | ||||||
| Units produced | 103,000 | 83,000 | 18,000 | 204,000 | |||||
| Joint costs | ? | ? | ? | $957,000 | |||||
| Sales value at split-off point | $810,000 | $555,000 | $135,000 | $1,500,000 | |||||
| Additional cost if processed further | $95,000 | $28,000 | $13,000 | $136,000 | |||||
| Sales value if processed further | $1,003,000 | $523,000 | $151,000 | $1,677,000 |
REQUIRED:
Assuming that the 18,000 units of Very Flexible were processed further and sold, what would be the gross margin on this sale?
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