The Exotic Flower company makes perfume. In stage 1, it reduces flower petals, generating liquid and waste petals. In stage 2, it uses the liquid to make Seduction and Romance, which are high-quality and lower-quality perfumes. For April, the firm processed 25,000 pounds of petals (joint cost in stage 1 =$300,000) and generated 12,000 lbs. of waste petal (value = $1.50 per pound). It spent an additional $224,000 in joint costs in stage 2. It also spent $120,000 to package 2,000 oz. of Seduction and $228,000 to package 8,400 oz. of Romance. Seduction sells for $180 per oz. while Romance sells for $70 per oz.

Determine (in $) the gross margin from Seduction if joint costs are allocated using the NRV method, and waste metals are treated as a by-product, valued using the production method.

Answer rating: 100% (QA)

Solution Gross Margin Sales cost Cost includes both Joint cost and cost incurred after split off Sin... View the full answer