Answer the following question(s)using the information below:
The Morton Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result.The following information was collected for the month of October: The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances.
-Using the sales value at splitoff method, what is the gross margin percentage for condensed goat milk at the splitoff point?
A)21.1%
B)55.1%
C)58.1%
D)38.2%
E)41.9%

Question

Answer the following question(s)using the information below:
The Morton Company processes unprocessed goat milk up to the splitoff point where two products, condensed goat milk and skim goat milk result.The following information was collected for the month of October:   The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances.
-Using the sales value at splitoff method, what is the gross margin percentage for condensed goat milk at the splitoff point?
A)21.1% 
B)55.1% 
C)58.1% 
D)38.2% 
E)41.9%

Quizplus · Accepted Answer

The sales value at splitoff method allocates joint costs based on the relative sales value of each product at the splitoff point. To find the gross margin percentage, you subtract the allocated joint cost from the sales value, divide by the sales value, and multiply by 100. The correct calculation results in a gross margin percentage of 58.1% for condensed goat milk.

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