Documente Academic
Documente Profesional
Documente Cultură
Income Statement:
Product A Product B Total _
Sales 1,800 1,200 3,000
Cost of Goods Sold 1,680 720 2,400
Gross Margin 120 480 600
Gross Margin %:
Product A = 120 / 1,800 = 7%
Product B = 480 / 1,200 = 40%
Total = 600 / 3,000 = 20%
1
Product A weighed 700 pounds and had a sales value at the
split-off point of $1,800; Product B weighed 300 pounds and had
a sales value at the split-off point of $1,200
Cost Allocation:
Product A = 1,800 / (1,800 + 1,200) x 2,400 = 1,440
Product B = 1,200 / 3,000 x 2,400 = 960
2,400
Income Statement:
Product A Product B Total _
Sales 1,800 1,200 3,000
Cost of Goods Sold 1,440 960 2,400
Gross Margin 360 240 600
Gross Margin %:
Product A = 360 / 1,800 = 20%
Product B = 240 / 1,200 = 20%
Total = 600 / 3,000 = 20%
Cost Allocation:
Product A = 2,925 / (2,925 + 975) x 2,400 = 1,800
Product B = 975 / 3,900 x 2,400 = 600
2,400
2
Income Statement:
Product A Product B Total _
Sales 3,600 1,400 5,000
Cost of Goods Sold 2,475 1,025 3,500
Gross Margin 1,125 375 1,500
Gross Margin %:
Product A = 1,125 / 3,600 = 31%
Product B = 375 / 1,400 = 27%
Total = 1,500 / 5,000 = 30%
3
Cost of Goods Sold:
Product A = (1 – 30%) x 3,600 = 2,520
Product B = 70% x 1,400 = 980
Cost Allocation:
Product A = 2,520 - 675 = 1,845
Product B = 980 - 425 = 555
2,400
Income Statement:
Product A Product B Total _
Sales 3,600 1,400 5,000
Cost of Goods Sold 2,520 980 3,500
Gross Margin 1,080 420 1,500
Gross Margin %:
Product A = 1,080 / 3,600 = 30%
Product B = 420 / 1,400 = 30%
Total = 1,500 / 5,000 = 30%
C. Special Considerations
1. Decision Making
a. Short-run Decision--at the split-off point the decision to sell a
joint product at the split-off point or to process the joint
product beyond the split-off point before selling it is determined
by comparing the additional revenue generated from processing the
joint product beyond the split-off point with the additional costs
from processing the joint product beyond the split-off point
1) Illustrations
a) A corporation incurred joint costs of $4,600 in
manufacturing Product A and Product B to the split-off
point; Product A can be sold at the split-off point for
$3,500 or for $5,000 after incurring additional processing
costs of $1,200; Product B can be sold at the split-off
point for $2,500 or for $3,000 after incurring additional
processing costs of $700
Additional Profit From Processing:
Product A = (5,000 – 3,500) – 1,200 = 300
Product A should be processed beyond the split-
off point.
4
Profit From Processing Product A = 5,000 + 2,500 –
(4,600 + 1,200) =
1,700
5
Profit at Split-off Point = 3,500 + 2,500 – 6,200 =
(200)
6
pounds of Product B were sold; 400 pounds of Product C were
sold
Cost Allocation:
Product A = 2,000 / (2,000 + 3,000) x 16,000 = 6,400
Product B = 3,000 / 5,000 x 16,000 = 9,600
16,000