Anchorage Company manufactures three main products,L,M and N,from a joint process.Additional information for June production activity follows: Assuming that the 10,000 units of N were processed further and sold for $78,000 what was Anchorage's gross profit from this sale? Assume the physical quantities method of allocation is used.
A)$21,000
B)$28,500
C)$30,000
D)$66,000

Question

Quizplus · Accepted Answer

The gross profit is calculated as the sales revenue minus the joint cost allocated to product N. Using the physical quantities method, the joint cost is allocated based on the proportion of units. If the joint cost allocated to N is $57,000, then the gross profit is $78,000 - $57,000 = $21,000.

Anchorage Company Manufactures Three Main Products,L,M and N,from a Joint