Reference no: EM132823113
Problem - Johnston Adhesives Company makes three widely used industrial adhesives: A101, A204, and B216. Sales and production information for each of the three adhesives are shown in the following table. Most of Johnston's customers ask for a special blend of the three products, which improves heat-resistance. The additional separable processing requires additional time and materials, and the price is increased accordingly, as shown in the table. Assume that Johnston produces only for specific customer orders, so there is no beginning or ending inventory. Assume also that all of Johnston's customers requested the heat-resistant version of the products so that all production required additional separable processing. Total joint cost for the three products is $4,240,000.
|
|
A101
|
A204
|
B216
|
|
Gallons sold
|
199,000
|
178,000
|
150,000
|
|
Final sales price per gallon
|
$18
|
$9
|
$11
|
|
Price at split-off
|
15
|
5
|
7
|
|
Separable processing cost
|
$784,000
|
$128,000
|
$663,000
|
Required - Calculate the unit product cost and total gross margin for each of the three product lines using the following methods:
(a) physical measure method,
(b) sales value at split-off method,
(c) the net realizable value method, and
(d) the constant gross margin percentage method.