Question
Purple Paper Company processes wood pulp into two products. During July the joint costs of processing were $50,000. Production and sales value information for the
Purple Paper Company processes wood pulp into two products. During July the joint costs of processing were $50,000. Production and sales value information for the month were as follows:
Sales Value at
Product Kilograms Produced splitoff Point Separable Costs
Paper 125,000 $63,000 $221,000
Cardboard 96,000 46,000 262,000
Paper sells for $2.71 a kilogram and cardboard sells for $3.10 a kilogram.
There were no beginning or ending inventories for July
QUESTION:
Determine the amounts to be allocated to paper using the onstant gross margin percentage of NRV method
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