Sweet manufactures three types of plant food using a joint process. The cost of materials used during a typical period is $98,000, while labour and overhead are $146,000. This level of operations results in 38,500 kilograms of PF1, 11,000 kilograms of PF2, and 5,500 kilograms of PF3. PF1 can be sold "as is" for $8/kg. PF2 can be sold "as is" for $3/kg. or processed further at a cost of $1.4/kg. and then sold for $4/kg (identify this end product as PF4). PF3 requires further processing costs of $1/kg and is eventually sold for $2.5/kg.

Determine gross margin by product line if Sweet sells 34,000 kg of PF1, 8,200 kg. of PF2, and 5,500 kg of PF3 in a particular period. Sweet uses the NRV method to allocate joint costs.

Product 1 Product 2 Product 3

Gross Margin

ssume the firm does not sell PF2 "as is" but instead incurs separate processing costs of $15,400 per batch of 11,000 kg to finish the product. The finished products sell for $4/kg. Assume that Sweet sold 34,000 kg of PF1, 6,500 kg. of PF 4, and 5,500 kg. of PF3. What is the gross margin by product line for the period using the NRV method? (Round intermediate calculations to 6 decimal places, e.g. 1.456736 and final answers to 0 decimal places, e.g. 125.)

Pf 1 Pf 3 Pf4

Gross Margin

Assume that Sweet could sell the same number of kilograms of PF2 or PF4. Should the company process PF2 further into PF4 or sell it "as is"?

When sold "as is" $( )

When processed further $( )

a. The company should process PF2 further into PF4.

b. The company should PF2 "as is".

c. The company would be indifferent between PF2 and PF4.