Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the gross margin for the 50 ft board using the net realizable value (NRV) method to allocate joint costs? (Round the nearest whole dollar)

Question

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows:  What is the gross margin for the 50 ft board using the net realizable value (NRV) method to allocate joint costs? (Round the nearest whole dollar)

Quizplus · Accepted Answer

($50,000 - $10,000) + ($55,000 - $12,000) + ($62,000 - $18,000) = $127,000 ($62,000 - $18,000) ÷ $127,000 x ($50,000 + $35,000) = $29,449. $62,000 - $18,000 - $29,449 = $14,551 (25 ft sales value - 25 ft costs) + (30 ft sales value - 30 ft costs) +(50 ft sales value - 50 ft costs) = total NRV (50 ft sales value - 50 ft costs) ÷ total NRV x (raw mat. + additional processing costs) Sales value - further processing costs- joint costs

Tober Inc Operates a Lumber Yard