[laila25]

The Clarion Janez Chemical Company produces 2 products which requires an initial common process. The 2 products are BT41 (5000 Units) ant BT46 (10,000 Units). The common joint costs were $90,000 for the month of January. There are no sales values at splitoff. However, with additional processing the output as follows:

Product Separable costs Volume Produced Sales Value

BT41 $20,000 5000 units $100,000
BT46 $60,000 10,000 units $300,000


6.1 Determine the values of each of the 2 products at splitoff if the net realizable value (NRV) is used for the calculation.
6.2 Determine the gross margin for the sale of each of the products produced and sold after all processing was completed.

[suhaila_rahiman]

Should be something like this

1. fid the NRV

BT41 BT46
Sales ($) 100,000 300,000
Less: Further Processing Cost($) 20,000 60,000
NRV($) 80,000 240,000
Cost Share Ratio =80,000/(240,000+80,000)
25% =240,000/(240,000+80,000)
75%
Joint Cost Apportionment ($) =90,000 X 25%
22,500 =90,000 X 75%
67,500

2. gross margin for the sale of each of the products produced and sold after all processing was completed

BT41 ($) BT46 ($)
Sales 100,000 300,000
Less: Joint Production Cost 22,500 67,500
Less: Further Processing Cost 20,000 60,000
Gross Profit 57,500 172,500