Allocating Joint Costs Using the Constant Gross Margin Method

A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:

Required:

1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.

2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

(Note: The joint cost allocation does not equal $12,900 due to rounding.)

3. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

(Note: The joint cost allocation does not equal $12,900 due to rounding.)

Allocating Joint Costs Using the Constant Gross Margin Method

A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:

Required:

1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.

2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

(Note: The joint cost allocation does not equal $12,900 due to rounding.)

3. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

(Note: The joint cost allocation does not equal $12,900 due to rounding.)

1. Allocating Joint Costs Using the Constant Gross Margin Method

   A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,700. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:

   Product	Gallons	Further Processing Cost per Gallon	Eventual Market Price per Gallon
   L-Ten	3,400	$0.50	$2.00
   Triol	4,000	1.00	5.00
   Pioze	2,600	1.50	6.00

   Required:

   1. Calculate the total revenue, total costs, and total gross profit the company will earn on the sale of L-Ten, Triol, and Pioze.

   Total Revenue	$
   Total Costs	$
   Total Gross Profit	$

   2. Allocate the joint cost to L-Ten, Triol, and Pioze using the constant gross margin percentage method. Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

   	Joint Cost
   Product	Allocation
   L-Ten	$
   Triol
   Pioze
   Total	$

   (Note: The joint cost allocation does not equal due to rounding.)

   3. What if it cost $2.00 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to these three products? Round the gross margin percentage to four decimal places and round all other computations to the nearest dollar.

   	Joint Cost
   Product	Allocation
   L-Ten	$
   Triol
   Pioze
   Total	$

   (Note: The joint cost allocation does not equal due to rounding.)

Check My Work

            Kiko Ltd is a family owned Asian grocery business that specialises in selling a variety of Japanese products. The company has recently started to receive orders from hotels across the state. It is now 1 October, and Mr Seike, the owner, is very pleased with his growing business. He compiled data on the business’ revenue and purchases for the past three months, and prepared forecasts for the upcoming three months as shown below:

The cash balance on 1 October is $95,000; 
The following information is also pertinent to Kiko’s cash movements:

          20% of all sales per month are for cash, 70% of all credit sales are collected within the month of sale, 
20% of credit sales are collected in the month following the sale, 7% of credit sales are collected two 
months after the sale, and the remaining 3% is deemed uncollectible; 


          70% of the amount for goods purchased is paid in the month of purchase, with the remaining 30% is 
paid in the following month; 


          Wages total $12,000 each month and are paid in the month they are incurred; 


          Budgeted operating expenses total $22,000 per month, and includes depreciation ($14,000) and rent 
($2,500). Rent was prepaid in June for 6 months (up to and including December); and 


          $1,200 in interest payments are made on October 17th. 


Based on the above information, prepare the following for Kiko Ltd: 


(a) A schedule of cash receipts for October from sales.

(b) A cash budget for October.

(c) Recommend three options for improving the speed of cash collections from sales to improve the cash position.

Foreign currency analysis of Merck & Co. which is s an American multinational pharmaceutical company and one of the largest pharmaceutical companies in the world.

Explain the relationship between the stock price of the company and those three currencies, Euro, Yen, and Renminbi which are the most exposed to the company and how sensitive the company's value is against the change in the value of the three foreign currencies against US dollar.

State references.

The salaries of managers at a distributing company revealed a mean income of $72,000 with a standard deviation of $3,000.

Using Chebyshev’s Theorem, at least what percentage of the managers $65,400 but no more than $78,600?

Using Chebyshev’s Theorem, at least what percentage of the managers earn between negative three and positive three standard deviations from the mean?

Under what conditions do you use the Chebyshev’s Theorem?

These are the results of a three point test cross in Drosophila for the three loci cv f v: cv + + = 155, cv f + = 78, + f + = 145, cv f v = 274, cv + v = 192, + + v = 72, + f v = 144, + + + = 230. What is the map distance to 2 decimal places between the v and f loci? Hint: Establish gene order first."

"These are the results of a three point test cross in Drosophila for the three loci cv f v: cv + + = 212, + v + = 48, + + + = 606, cv v + = 771, cv f v = 299, cv + f = 52, + f v = 229, + + f = 850. What is the map distance to 2 decimal places between the cv and f loci? Hint: Establish gene order first."

Kalokoni is a VAT registered trader. During the year to December 31, 2019, he bought
from a wholesaler grocery worth K9, 510 VAT exclusive. The wholesaler charges sales
tax at the prescribed rate of 16.5%. Kalokoni charged its customers on sale of the
groceries a price of K11, 200 VAT exclusive. Kalokoni also charged its customers VAT
on sales at 16.5%.
Required:

(i) Compute the VAT inclusive price that Kalokoni charged its customers on the
groceries.

(ii) Prepare the journal entries to record the sale of groceries in Kalokoni a’s general
ledger.

(iii) Calculate the input tax and output tax on Kalokoni’s purchase and sale of the
groceries.

(iv) How much VAT does Kalokoni pay to the government on the groceries
transactions above (1 mark)

(b) Kabisa commenced trading on 1 December 2018 as a distributor of the Straight Cut
garden lawn mower, a relatively new product which is now becoming increasingly
popular. Kabisa's purchases and sales of the Straight Cut garden lawn mower during the
three months ended 30 November 2019 are as follows:

Bought
January 1200 at K160 each
April 800 at K180 each.
October 1500 at K190 each

Sold.
June 1250 at k220 Each
November 2100 at k250 each.

Required:
From the following figures calculate the closing inventory-in-trade that would be shown
using;
(i) FIFO,
(ii) AVCO method on a perpetual inventory basis;
(iii) AVCO method on a simple inventory basis