The Rich and Creamy Edibles Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-chocolate liquor base. These two intermediate products become separately identifiable at a single split off point. Every 600 pounds of cocoa beans yields 20 gallons of chocolate-powder liquor base and 60 gallons of milk-chocolate liquor base which are further processed to chocolate powder and milk chocolate

Cocoa beans processed, 27,600 pounds

Costs of processing cocoa beans to split off point (including purchase of beans), $70,000

Production

Sales

Selling Price

Separable Processing Cost

Chocolate powder

31280 pounds

6800

$8

$46,035

Milk Chocolate

50,600 pounds

14,400

$9

$55,085

Using constant gross margin percentage to allocate joint cost, the joint cost allocated to chocolate powder and milk powder would be as follows: