Concrete Mixtures created cement lawn ornaments for its customers. The joint process costs $165,000 and creates two identifiable products, XS and M. The company has determined M can be sold as-is or processed further into product XL for an additional cost of $325,000. Information for the products is: Instructions:
a. Allocate the joint costs to each product using the sales value at split-off method, assuming XS and M are sold as-is with no further processing.
b.Calculate the gross margin for products XS and M, assuming they are sold at split-off, and the sales value at split-off method is used to allocate joint costs.
c. If product M is further processed into Product XL, allocate the joint costs using the NRV method and calculate the gross margin for Product XL.
d.Should Product M be further processed into Product XL? Report the profit increase or decrease if Product M is processed further.

Question

Concrete Mixtures created cement lawn ornaments for its customers. The joint process costs $165,000 and creates two identifiable products, XS and M. The company has determined M can be sold as-is or processed further into product XL for an additional cost of $325,000. Information for the products is:  Instructions: 
a. Allocate the joint costs to each product using the sales value at split-off method, assuming XS and M are sold as-is with no further processing.
b.Calculate the gross margin for products XS and M, assuming they are sold at split-off, and the sales value at split-off method is used to allocate joint costs.
c. If product M is further processed into Product XL, allocate the joint costs using the NRV method and calculate the gross margin for Product XL.
d.Should Product M be further processed into Product XL? Report the profit increase or decrease if Product M is processed further.

Quizplus · Accepted Answer

The Answer of Concrete Mixtures created cement lawn ornaments for its customers. The joint process costs $165,000 and creates two identifiable products, XS and M. The company has determined M can be sold as-is or processed further into product XL for an additional cost of $325,000. Information for the products is:  Instructions: 
a. Allocate the joint costs to each product using the sales value at split-off method, assuming XS and M are sold as-is with no further processing.
b.Calculate the gross margin for products XS and M, assuming they are sold at split-off, and the sales value at split-off method is used to allocate joint costs.
c. If product M is further processed into Product XL, allocate the joint costs using the NRV method and calculate the gross margin for Product XL.
d.Should Product M be further processed into Product XL? Report the profit increase or decrease if Product M is processed further.

Concrete Mixtures Created Cement Lawn Ornaments for Its Customers