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Available data from Al- Hammy company for the month of march 2019 Joint cost $1850 Production Sales Product A 60 units 50 units for total revenue $1800 Product B 70 units 55 units for total revenue $1210 Depend on (S
Available data from Al- Hammy company for the month of march 2019 Joint cost $1850 Production Sales Product A 60 units 50 units for total revenue $1800 Product B 70 units 55 units for total revenue $1210 Depend on (S.V at split off point) gross margin percentage for product A would be:(5 Points)
%40
%50
%55
no answer
2.for above data the gross margin for product B would be:(5 Points)
$600
770
no answer
605
Expert Solution
Joint cost = $1850
Production
Product A = 60 units
Product B = 70 units
Sales value per units = S.V at split of point per units = Total revenue / Sold units
Product A = 1800 / 50 = $36
Product B = 1210 / 55 = $22
.
Joint cost allocation under Sales value at split of point
Total S.V at split of point = S.V at split of point per units * Production units
Product A = 36 * 60 units produced = 2160
Product B = 22 * 70 units produced = 1540
|
Product |
S.V at split of point (A) |
Proportion |
Joint cost allocated (B) |
Gross margin (A - B) |
|
A |
2160 |
2160/3700 =0.5838 |
1850*0.5838 =1080 |
2160-1080 =1080 |
|
B |
1540 |
1540/3700 =0.4162 |
1850*0.4162 =770 |
1540-770 =770 |
|
Total |
3700 |
1 |
1850 |
1880 |
.
Gross margin percentage = Gross profit / Total sales
.
1 > gross margin percentage for product A would be:
gross margin percentage = 1080 / 2160 = 0.50 or 50%
.
2 > for above data the gross margin for product B would be:
.
Gross margin = 770
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