Question
Premier Maple Syrup, located in Quebec, process maple sap into maple syrup, maple sugar, and maple butter. The company has one manager for each of
Premier Maple Syrup, located in Quebec, process maple sap into maple syrup, maple sugar, and maple butter. The company has one manager for each of the three main products. The managers receive bonuses based on the profitability of their individual products. Lately they have been concerned about the impact of the allocations of joint costs on the profitability of each of the product lines. They approached the Director, Justin Trudeau, who explained that several different allocation methods could be used and that the gross margin of each product would change with each method. Trudeau agreed that he would get the accountant (you) to provide the managers with information about product profitability using each of the acceptable joint product cost allocation methods. First, you gathered data for the current period. During the spring of 2020, the joint costs of processing maple sap were $2,000,000. The company had no beginning or ending inventories for the season. Production and sales information for the season were as follows:
Product | Cases | Sales Value at Split-Off | Separable Costs | Selling Price |
Maple Syrup | 70,000 | $24 per case | $12 per case | $56.00 per case |
Maple Sugar | 22,000 | $26 per case | $16 per case | $46.00 per case |
Maple Butter | 8,000 | $31 per case | $14 per case | $46.50 per case |
Sales value at split-off varies for each product because the grade and kilograms of sap required for each option vary. Also, a 'case' is used as the common unit of measure because syrup is measured in millilitres while sugar and butter are measured in grams.
For the following multi-choice question, submit your written answer from the multi-choice question Excel Workbook or the space provided here. 5 marks for the multi-choice question for showing correct work. (Suggested time for Premier Maple Syrup = 15 minutes)
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Question 2 (1 point)
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Required: For Premier Maple Syrup, using the Physical Measure Method of allocating joint costs, what is the total Gross Margin for Maple Sugar?
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