Question 5 (Total = 12 marks) The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June: Direct Materials processed: 22,500 gallons (after shrinkage) Production: Butter Cream Condensed Milk Sales: Butter Cream Condensed Milk Sales Price: Butter Cream Condensed Milk Separable costs in total: Butter Cream Condensed Milk 12,000 10,500 11,500 10,000 $3.50 $9.00 gallons gallons gallons gallons per gallon per gallon $15,000 $35,800 The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 22,500 gallons of saleable product was $51,000. Required: a/ The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the amount of allocated joint costs of Condensed Milk? (Round intermediary percentages to the nearest hundredth.) (3 marks) b/Why is the physical-measure method the least preferable method when allocating joint costs to products. In not more than 100 words, explain why and illustrate with an example of your own? Explain and state three reasons why are joints costs allocated to individual products? (9 marks) Question 5 (Total = 12 marks) The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June: Direct Materials processed: 22,500 gallons (after shrinkage) Production: Butter Cream Condensed Milk Sales: Butter Cream Condensed Milk Sales Price: Butter Cream Condensed Milk Separable costs in total: Butter Cream Condensed Milk 12,000 10,500 11,500 10,000 $3.50 $9.00 gallons gallons gallons gallons per gallon per gallon $15,000 $35,800 The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 22,500 gallons of saleable product was $51,000. Required: a/ The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the amount of allocated joint costs of Condensed Milk? (Round intermediary percentages to the nearest hundredth.) (3 marks) b/Why is the physical-measure method the least preferable method when allocating joint costs to products. In not more than 100 words, explain why and illustrate with an example of your own? Explain and state three reasons why are joints costs allocated to individual products? (9 marks)