70.2K

Verified Solution

Link Copied!

a) Allocate joint costs based on sales-value at the split-off point method.

b)Allocate joint costs based on the physical measure method.

c)Find the gross margin for both a) b)

The Rich and Creamy Chocolate Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products, chocolate-powder liquor base and milk- chocolate liquor base. Every 500 pounds of cocoa beans yields 20 gallons of chocolate-powder liquor base and 30 gallons of milk-chocolate liquor base. The chocolate-powder liquor base is further processed into chocolate powder, with every 20 gallons of chocolate-powder liquor base yielding 200 lbs. of chocolate powder. The milk-chocolate liquor base is further processed into milk chocolate, with every 30 gallons of milk- chocolate liquor base yielding 340 lbs. of milk chocolate. There is an active market for the intermediate products where chocolate-powder liquor base sells for $21 per gallon and the milk-chocolate liquor base for $26 per gallon. During August, 5,000 pounds of cocoa beans were processed and the cost of processing to the split-off point was $10,000. Production and sales data for August are: Production Sales units Sales price Separable costs $4,250 $8,750 Chocolate powder Milk chocolate 2,000 pounds 3,400 pounds 2,000 pounds 3,400 pounds $4 / lb. $5 / lb

Answer & Explanation Solved by verified expert

See Answer