Question
Holland Company produces products A, B, and C from a joint production process. Each product may be sold at the split-off point or processed further.
Holland Company produces products A, B, and C from a joint production process. Each product may be sold at the split-off point or processed further. Joint production costs of $57,000 per year are allocated to the products based on the relative number of units produced. Data for Holland Company's operations for last year follow:
Sales Values If Processed Further |
Costs of Processing Further | |||
Units Produced | Sales Values at Split-Off | |||
Product A | 6,000 | $75,000 | $100,000 | $20,000 |
Product B | 9,000 | $70,000 | $115,000 | $36,000 |
Product C | 4,000 | $46,500 | $55,000 | $10,000 |
Assume Holland Company makes each decision to sell at split off or process further solely based on profit factors. Assume no other production costs and no beginning or ending inventories. How much will be the companys total gross margin from the sales of these products?
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