Question

The Sunny Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff​ point: A,​ B, C, and D. Product C is fully processed by the splitoff point. Products​ A, B, and D can individually be further refined into Super​ A, Super​ B, and Super D. Data related to December​ are:

The output at the splitoff point​ was:

Product A	400,000 litres
Product B	200,000 litres
Product C	100,000 litres
Product D	100,000 litres

The joint costs of purchasing and processing the crude vegetable oil were $ 200,000. Sunny had no beginning or ending inventories. Sales of product C in December were $100,000. Products​ A, B, and D were further refined and then sold. Data related to December​ are:

	Separable Processing
	Costs to Make
	Super Products	Sales
Super A	$290,000	$450,000
Super B	110,000	150,000
Super D	90,000	150,000

Requirements

1. Compute the gross margin percentage for each product sold in​ December, using the following methods for allocating the $ 200,000 joint​ costs:

a. Sales value at splitoff.

  b. Physical measure.

c. NRV.

Sunny had the option of selling products​ A, B, and D at the splitoff point. This alternative would have yielded the following revenues for the December​ production:

Answer 1

Computation of joint-cost allocation proportions: