Further Processing Cost per Gallon Eventual Market Price per Gallon Product Gallons L-Ten 3,400 $0.50 $2.00 Triol 4,000 1.00 5.00 Pioze 2,300 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 40,600 Total Costs 21,950 Total Gross Profit 18,650 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 1,976 Triol 6,813 X Pioze 4,011 X Total $ 12,800 X (Note: The joint cost allocation does not equal due to rounding.) 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 $ 2,646 X Triol 4,783 X Pioze 5,370 X Total $ 12,799 X (Note: The joint cost allocation does not equal due to rounding.) Feedback Check My Work 1. The constant gross margin percentage method is used to avoid assuming that all profit occurs at the split-off point. It allocates joint cost to ensure that the same gross profit is applicable to all products. 2. Remember that the gross margin percentage is a function of revenues. 3. Consider Cornerstone 7.11 to show what would happen if the cost changed