Reference no: EM132930128

Question - Joint Products, Inc. produces medicine for the treatment of liver disease in batches. Chemicals costing $50,000 are mixed and heated at a cost of $200,000. A batch yields a total of 3,000 gallons of chemicals. The first 2,500 gallons are sold for human use while the last 500 gallons with impurities sold as fertilizer.

The output used for human use is further processed at a total cost of $150,000 and is sold for $650 per gallon. The product sold as fertilizer is further processed at a cost of $20 per gallon and sold for $450 per gallon.

In March, Joint Products, Inc. processed one batch of chemicals. It sold 2,000 gallons of product for human use and 300 gallons of fertilizer. Joint Products, Inc. use the NRV method for allocating the joint production costs.

1) Calculate the joint cost allocated to each product using the Net Realizable Value method.

2) Determine the cost of ending inventory for each product using the Net Realizable Value method).

3) Calculate the gross margin percentages for each product in March.