It purchases cocoa beans and processes them into twointermediate? products: chocolate-powder liquor base and?milk-chocolate liquor base. These two intermediate products becomeseparately identifiable at a single splitoff point. Every 900pounds of cocoa beans yields 30 gallons of? chocolate-powder liquorbase and 120 gallons of? milk-chocolate liquor base. The?chocolate-powder liquor base is further processed into chocolatepowder. Every 30 gallons of? chocolate-powder liquor base yield 670pounds of chocolate powder. The? milk-chocolate liquor base isfurther processed into milk chocolate. Every 120 gallons of?milk-chocolate liquor base yield 1,090 pounds of milkchocolate.

Cocoa beans? processed, 19,800 pounds times

Costs of processing cocoa beans to splitoff point? (includingpurchase of? beans), $ 68,000

	Production		Sales		Selling Price		Separable Processing Costs
Chocolate powder	14,740	pounds	6,700	pounds	$12	per pound	$8,975
Milk chocolate	23,980	pounds	14,500	pounds	$10	per pound	$91,095

Creme de Cacao Edibles Factory fully processes both of itsintermediate products into chocolate powder or milk chocolate.There is an active market for these intermediate products. InAugust 2017?, Creme de Cacao Edibles Factory could have sold the?chocolate-powder liquor base for $ 24 a gallon and the?milk-chocolate liquor base for $ 9 a gallon.

Requirement 1. Calculate how the joint costs of

$ 68000 would be allocated between chocolate powder and milkchocolate under the different methods.

a. Sales value at splitoff method. Begin by entering theappropriate amounts to allocate the joint costs. ?(Round theweighting amounts to four decimal? places.)

	Sales value of total		Joint costs
	production at splitoff	Weighting	allocated
Chocolate powder
Milk chocolate
Total

b. Allocate the joint costs using the physical measure method.Begin by entering the appropriate amounts to allocate the jointcosts. ?(Round the weighting amounts to four decimal? places.)

	Physical measure of		Joint costs
	total production	Weighting	allocated
Chocolate powder
Milk chocolate
Total

c. Allocate the joint costs using the net realizable valuemethod. Begin by entering the appropriate amounts to allocate thejoint costs. ?(Round the weighting amounts to four decimal places.Round the joint costs allocated to the nearest whole? dollar.)

	Net realizable		Joint costs
	value	Weighting	allocated
Chocolate powder
Milk chocolate
Total

d. Constant? gross-margin percentage NRV method. Begin byentering the appropriate amounts to allocate the joint costs.?(Round the percentage to four decimal? places, X.XXXX%.)

The overall gross-margin percentage for all joint productstogether is

%.

Now determine the formula to compute the joint costs? allocated,then enter the appropriate amounts. ?(Round your answers to thenearest whole? dollar.)

Total production costs

-

Separable processing costs

=

Joint costs allocated

Chocolate powder

-

=

Milk chocolate

-

=

Requirement 2. What are the? gross-margin percentages ofchocolate powder and milk chocolate under each of the methods inrequirement? 1? ?(Use parentheses or a minus sign when enteringnegative amounts. Round the percentages to the nearest hundredth?percent, X.XX%.)

	Chocolate powder		Milk chocolate
a. Sales value at splitoff		%		%

b. Physical-measure

%

%

c. NRV

%

%

d. Constant gross-margin percentage NRV

%

%

Requirement 3. Could

Cocoa Nibs

Edibles Factory have increased its operating income by a changein its decision to fully process both of its intermediate?products? Show your computations. ?(Use parentheses or a minus signwhen entering decreasing? amounts.)

Begin by determining the formula to compute the?increase/(decrease) in operating? income, then enter theappropriate amounts.

					Increase/(decrease)
	Incremental revenue	-	Separable processing costs	=	in operating income

Chocolate powder

-

=

Milk chocolate

-

=

Cocoa Nibs

Edibles Factory could increase operating income if?chocolate-powder liquor base is

further processed into chocolate powder

and if? milk-chocolate liquor base is

further processed into milk chocolate.