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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