Ardmore Company Produces Two Main Products Jointly, a and B

question 67

Essay

Ardmore Company produces two main products jointly, A and B, and C, which is a by-product of B. A and B are produced from the same raw material. C is manufactured from the residue of the process creating B.

Costs before separation are apportioned between the two main products by the net realizable value method. The net revenue realized from the sale of C is deducted from the cost of B. Data for April were as follows:

Costs before separation	$200,000
Costs after separation:
A	50,000
B	32,000
C	4,000
Production for April, in pounds:
A	800,000
B	200,000
C	20,000
Sales for April:
A	640,000 pounds @ $.4375
B	180,000 pounds @ .65
C	20,000 pounds @ .30

Required: Determine the gross profit for April.

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