A2 - 9.36 Relative Sales Value at Split-Off and Constant...

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9.36 Relative Sales Value at Split-Off and Constant Gross Margin Percentage Methods (1) Relative sales value at split-off method Product X Product Y Product Z Total Sales value at split-off $80,000 $70,000 $50,000 $200,000 % of total sales value at split-off* 40% 35% 25% 100% Joint cost allocations** $32,00 0 $28,000 $20,000 $80,000 * Percentage equals product’s sales value at split-off divided by total sales value at split-off (e.g., for product X, 40% = $80,000 / $200,000) ** Joint cost allocation equals % of total sales value at split-off times total joint costs (e.g., for product X, $32,000 = 40% x $80,000) (2) Constant gross margin percentage method Product X Product Y Product Z Total Sales value $110,000 $90,000 $50,000 $250,000 Joint cost allocations (step 3) 31,280 26,320 22,400 80,000 Additional processing costs 18,000 14,000 0 32,000 Gross margin (step 2) $60,720 $49,680 $27,600 $138,000 Gross margin % (step 1) 55.20% 55.20% 55.20% 55.20% In part (2), an embedded decision is the process or sell decision. Depending on the process or sell decision, gross margin is different. In this case, Product X, Y are processed further while Product Z is sold at split-off. Check if you reach the same decision for each product. 9.38 By-products
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Method 1 Method 2 Sales revenue. .................................... $140,00 0 $140,0 00 Other income. ..................................... 450 -0- Total revenue. .................................... $140,45 0 $140,0 00 Cost of goods sold: Unadjusted. ...................................... 72,000 72,000 Less: By-product net realizable value. (450) Adjusted cost of goods sold. ................ $72,000 $71,55 0 Gross margin. ..................................... $68,450 $68,45 0 9.46 NRV method and effects of further processing The answers to requirements a, b, and c follow the spreadsheet. A description of the information in the
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This note was uploaded on 01/16/2010 for the course AF AF 3112 taught by Professor Woo-jonglee during the Spring '08 term at Polytechnic University of Puerto Rico.

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A2 - 9.36 Relative Sales Value at Split-Off and Constant...

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