Wayne Company makes three different additives used in the electronics industry - Additive 101 (A101). Additive 204 (A204), and B Additive 216 (B216). Most of the electronics customers ask for a blend of the three as it makes them more efficient in the manufacturing process and improves heat-resistance, but some buy them separately as well. The blending requires additional separable processing which uses up more time and materials, and thus the price is higher if the three products are blended. Sales and production data for the three additives is in the table below. Total joint cost for the three products is $3,425.000. Each product can be processed further and sold at a higher (final) sales price, but it can also be sold at the split-off point. Assume that there is no beginning and ending inventory, and all customers asked for the more efficient and heat-resistant blend of the three additives so all production requires additional separable processing A101 0216 Gallons sold 202,600 135,000 Final sales price per gallon $9 Price at split-off Separable processing cost $ 607,000 $ 115,000 Required: 1. Using the information provided, please calculate both the cost per unit and total gross margin for A101 A204 and B216 using the following methods: (a)physical measure method. (b) sales value at split off method, (c) the net realizable value method, and (d) the constant gross margin percentage method. (Do not round intermediate calculations. Round cost per unit answers to 4 decimal places and gross margin answers to the nearest whole dollar. Negative amounts should be indicated with a minus sign.) $14 11 1204 183,000 $5 4 $ 550,000 15, $ 550,000 Required: 1. Using the information provided, please calculate both the cost per unit and total gross margin for A101, A204, and B216 using the following methods: (a) physical measure method, (b) sales value at split off method, (c) the net realizable value method, and (d) the constant gross margin percentage method. (Do not round intermediate calculations. Round cost per unit answers to 4 decimal places and gross margin answers to the nearest whole dollar. Negative amounts should be indicated with a minus sign.) A101 A 204 B216 a Physical Measure Method Cost per unit Total gross margin 6 Sales Value at Split-Off Method Cost per unit Total gross margin Net Realizable Value Method Cost per unit Total gross margin d Constant Gross Margin Method Cost per unit Total gross margin binnend be pated in this case? Total gross margin Sales Value of Split Of Method Cost per unit Total gross margin c Not Realable Value Method Cost per unit Total gross margin d. Constant Gross Margin Method Cost per unit Total gross margin 2. Based on what you know about the four methods, which one do you believe would be preferred in this case? Physical measure method O Sales value at split-off method O Net realizable value method O Constant gross margin method
