Scott Paper Company produces joint products P-1 and P-2, and by-product B-1. P-1 is sold at split-off; P-2 and B-1 undergo additional processing. Production data
Scott Paper Company produces joint products P-1 and P-2, and by-product B-1. P-1 is sold at split-off; P-2 and B-1 undergo additional processing. Production data pertaining to these products for the year ended December 31 were as follows:
|
| P-1 | P-2 | B-1 | Total |
| Joint costs |
|
|
|
|
| Variable |
|
|
| $98,000 |
| Fixed |
|
|
| 135,000 |
| Separable costs |
|
|
|
|
| Variable |
| $110,000 | $5,000 | 115,000 |
| Fixed |
| 92,000 | 8,000 | 100,000 |
| Production in pounds | 55,000 | 35,000 | 10,000 | 100,000 |
| Sales price per pound | $5.00 | $8.50 | $2.25 |
|
Scott had no beginning or ending inventories and no materials were spoiled in production. B-1's net realizable value is deducted from joint costs. Joint costs are allocated to joint products to achieve the same gross margin percentage for each joint product. Required: Prepare the following information for Scott Paper Company for the year ended December 31, 2022: 1. Total gross margin. 2. Allocation of joint costs to P-1 and P-2. 3. Separate gross margins for P-1 and P-2.
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Authors: Peter Brewer, Ray Garrison, Eric Noreen
9th Edition
1265672008, 978-1265672003
