Question 12:

1. A joint manufacturing process is used to manufacture 500,000 kg of CH54 at a cost of $1,750,000.

SN62

350,000 kg of CH54 is used to manufacture 350,000 kg of SN62 at an additional process cost of $700,000. SN62 is sold for $11.00 per kg.

DN2

150,000 kg of CH54 is used to manufacture 100,000 kg of DN2 at an additional process cost of $495,000. DN2 is sold for $9.00 per kg.

Task

Allocate the joint manufacturing cost using the constant gross margin method.