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Calculate the unit product cost and total gross margin

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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.

Reference no: EM132823113

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