Question
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run
Allocating Joint Costs Using the Constant Gross Margin Method A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $13,000. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:
Product | Gallons | Further Processing Cost per Gallon | Eventual Market Price per Gallon |
L-Ten | 3,400 | $0.50 | $2.00 |
Triol | 4,000 | 1.00 | 5.00 |
Pioze | 2,600 | 1.50 | 6.00 |
3. What if it cost $2.00 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.
Joint Cost | |
Product | Allocation |
L-Ten | $ |
Triol | |
Pioze | |
Total | $ |
(Note: The joint cost allocation does not equal due to rounding.)
The correct answers for L-Ten is $2,566 and Pioze is $5,887. I get for Triol $4,547, but it's incorrect.
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