Question
After an additional consultation with her accountant, Tom realized he could collect the leftover bits of tea leaves from the floor to be sold to
After an additional consultation with her accountant, Tom realized he could collect the leftover bits of tea leaves from the floor to be sold to use as tea leaves to be read as fortunes. In 2020, Tom went back to selling B grade and C grade leaves without processing them. Instead, he focused on collection of leftover bits of tea for sale. In 2020, the harvesting costs for the tea were $400,000. This harvest yielded 14,000 bushels of A grade leaves, 15,000 bushels of B grade leaves, and 20,000 bushels of C grade leaves. The A grade leaves were sold for $12.5 per bushel, the B grade leaves were sold for $15 per bushel and the C grade leaves were sold for $20 per bushel. Additionally, Tom earned $40,000 from sales of leftover tea bits. Assume that Tom uses the production method to account for revenue from byproducts, and allocates joint costs using the sales value at the split-off point method.
How much of the joint cost will be allocated to: SHOW WORK
A grade leaves? B grades leaves? C grade leaves?
What will be the gross profit percentage for the Leftover Tea Bits?
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