Chem Manufacturing Company processes direct materials up to the split-off point where two products (X and Y)are obtained and sold.The following information was collected for the month of November:

The cost of purchasing 10,200 gallons of direct materials and processing it up to the split-off point to yield a total of 9500 gallons of good products was $1,050,000.
The beginning inventories totaled 35 gallons for X and 400 gallons for Y.Ending inventory amounts reflected 565 gallons of Product X and 1,515,000 gallons of Product Y.October costs per unit were the same as November.
Using the physical-volume method,what is Product X's approximate gross-margin percentage? (Round all intermediary calculations two decimal places. )
A)63%
B)56%
C)171%
D)68%

Question

Chem Manufacturing Company processes direct materials up to the split-off point where two products (X and Y)are obtained and sold.The following information was collected for the month of November:

The cost of purchasing 10,200 gallons of direct materials and processing it up to the split-off point to yield a total of 9500 gallons of good products was $1,050,000.
The beginning inventories totaled 35 gallons for X and 400 gallons for Y.Ending inventory amounts reflected 565 gallons of Product X and 1,515,000 gallons of Product Y.October costs per unit were the same as November.
Using the physical-volume method,what is Product X's approximate gross-margin percentage? (Round all intermediary calculations two decimal places. )
A)63% 
B)56% 
C)171% 
D)68%

Quizplus · Accepted Answer

11ea8a5a_a0b3_a947_a19c_31978cb3cc39_TB5540_00_TB5540_00_TB5540_00 * 5300/(5300 + 4200)= 0.5579 × $1,050,000 = $585,795
Gross-margin percentage $956,837 / $1,515,000 = 0.63 rounded

Chem Manufacturing Company Processes Direct Materials Up to the Split-Off