Chapter 7 BEX BEX.07.11

eBook Print Item 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 $12,900. 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: Eventual Market Further Processing Cost per Gallon Product Gallons Price per Gallon L-Ten 3,500 $0.50 $ 2.00 Triol 4,000 1.00 5.00 Pioze 2,500 1.50 6.00 Required: 1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze. Total Revenue $ 42,000 Total Costs $ 22,400 Total Gross Profit $ 19,600 2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar. Joint Cost Product Allocation L-Ten $ 1,983 Triol 6,666 Pioze 4,465 X Total $ 12,000 X (Note: The joint cost allocation does not equal $12,900 due to rounding.)