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In: Accounting

Available data from Al- Hammy company for the month of march 2019 Joint cost $1850 Production...

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

Solutions

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

ekkarill92 answered 2 years ago
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