Answer the Following Questions Using the Information Below:
the Kenton

question 45

Multiple Choice

Answer the following questions using the information below:
The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:
Direct Materials processed: 18,000 gallons (after shrinkage)
$\begin{array}{|l|l|r|r|}\hline \text { Production: } & \text { Butter Cream } & 7,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,500 & \text { gallons } \\\hline \text { Sales: } & \text { Butter Cream } & 7,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,000 & \text { gallons } \\\hline \text { Sales Price: } & \text { Butter Cream } & \$ 3.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 7.5 & \text { per gallon } \\\hline \begin{array}{l}\text { Separable costsin } \\\text { total: }\end{array} & \text { Butter Cream } & \$ 12,500 \\\hline & \text { Condensed Milk } & \$ 34,700\\\hline\end{array}$ The cost of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 18000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.
-What is the constant gross-margin percent for Kenton?

• A) 10%
• B) 6.3%
• C) 11%
• D) 6.5%

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Definitions:

Ordering Costs

Expenses associated with placing orders for more inventory, including costs related to order processing, communication, and transportation.

Memory Chips

Electronic components used to store data temporarily or permanently in computers and other devices.

Safety Stock

Safety stock is an additional quantity of an item held in inventory to reduce the risk of stockouts and production halts, serving as a buffer against demand fluctuations or supply delays.

Maximum Inventory

The highest quantity of goods that a company aims to keep in stock, considering factors like storage space and cash flow constraints.