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Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:
Candy type Numb er of pound s Price per pound at split- off Further processi ng costs Price after processi ng further Sweet Mats 50,000 $3 $75,000 $10.00 Chocolate Delight 100,00 0 510 530,000 510.50 Minty Wonders 25,000 $5 520,000 $5.50
If Chocolate Delight is processed further, the gross profit margin that will appear in a product line income statement for Chocolate Delight would be:
A. 5734,28 6. B. 5520,00 0. C. 51,020,00 0. D.S632,59
Answer
C .
Explanation
Computation of Gross Margin:
Gross Margin = Sales - Cost |
=100,000*$10.50 - $30,000 |
= $1,050,000 - $30,000 |
Gross Margin = $1,020,000 |