Delite Confectionary Company Produces Various Types of Candies -
If Chocolate Delight Is Processed Further, the Gross Profit

question 31

Multiple Choice

Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:
$\begin{array}{lr}&&&\text {Further}&\text {Price after}\\&\text { Number of }&\text {Price per pound at }&\text {processing }&\text {processing }\\\text { Candy type } &\text { pounds }&\text { split-off } &\text { costs } &\text { further }\\\text { Sweet Meats } & 50,000&\$8&\$75,000&\$10.00 \\\text { Chocolate } & 100,000&\$10&\$30,000&\$10.50 \\\text { Delight } & \\\text { Minty Wonders } & 25,000&\$5&\$20,000&\$5.50\end{array}$

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If Chocolate Delight is processed further, the gross profit margin that will appear in a product line income statement for Chocolate Delight (rounded to the nearest whole dollar) would be:

• A) $734,286.
• B) $520,000.
• C) $1,020,000.
• D) $632,596.

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Definitions:

Assembly

The process of putting together components or parts to build a finished product, often involving a combination of manual and automated techniques in manufacturing.

Predetermined Overhead Rate

An estimated overhead cost rate used in cost accounting to allocate expected indirect costs to specific products or job orders based on a specific activity base.

Machine-Hours

A measure of production time, where one machine-hour equals one hour of operation of a machine.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing of products or providing services.