Answer the Following Questions Using the Information Below:
the Brital

question 135

Multiple Choice

Answer the following questions using the information below:
The Brital 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: 28,000 gallons
$$\begin{array} { | l | l | r | r | } \hline \text { production: } & \text { butter Cream } & 12,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 15,500 & \text { gallons } \\\hline \text { Sales: } & \text { Gutter Cream } & 12,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 15,006 & \text { gallons } \\\hline \text { Sales: } & \text { butter Cream } & \$ 2.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 5.5 & \text { per gallon } \\\hline \text { Separable costs in } & & & \\\text { total: } & \text { butter Cream } & \$ 13,500 & \\\hline & \text { Condensed Milk } & \$ 33,708 & \\\hline\end{array}$$ The costs of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 28,000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.
-Which of the following statements is true of Brital?

• A) The gross profit percent of condensed milk is lower than the gross profit of butter cream.
• B) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point.
• C) The gross profit of condensed milk is lower than the gross profit of butter cream.
• D) The gross margin is allocated to the joint products in order to determine the joint-cost allocations.

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Definitions:

Relative Risk

A measure in epidemiology that quantifies the risk of a certain event happening in one group compared to its occurrence in another group.

Defective

Pertaining to a product or item that fails to meet the quality or performance standards, often due to manufacturing errors or flaws.

Supplier

An entity that provides goods or services to another entity, typically in a supply chain or business context.

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