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)

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.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the allocated joint costs of Condensed Milk? (Round intermediary percentages to the nearest hundredth.)
A) $34,678
B) $16,324
C) $15,000
D) $35,800

Question

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)

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.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the allocated joint costs of Condensed Milk? (Round intermediary percentages to the nearest hundredth.)
A) $34,678 
B) $16,324 
C) $15,000 
D) $35,800

Quizplus · Accepted Answer

Gross margin percentage calculation:
($136,500 - $51,000 - $35,800 - $15,000) / $136,500 = 25.42%
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The Kenton Company Processes Unprocessed Milk to Produce Two Products