The Brital Company Processes Unprocessed Milk to Produce Two Products,Butter

question 86

Multiple Choice

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:


The costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 33,000 gallons of saleable product was $55,000.
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 split-off 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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