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As the manager of the granite-crushing division, Robert has just recently started evaluating product profitability. The joint process for his division generates Grade 1 and
As the manager of the granite-crushing division, Robert has just recently started evaluating product profitability. The joint process for his division generates Grade 1 and Grade 2 granite pieces. Both grades at this point can be sold as-is, or Grade 2 can be processed further into Grade 3 (a stabilizer is added while it's further processed into very fine pieces). The quantities, costs, and sales values for the different grades of product are as follows. Assuming again that all quantities are sold, calculate gross margin for the division if Grade 2 is further processed into Grade 3 and the NRV method is used to allocate joint costs
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