Question

Chem Manufacturing Company processes direct materials up to the​ split-off point where two products​ (X and​ Y) are obtained and sold. The following information was collected for the month of​ November:

Direct materials processed​: 10,200 gallons​ (10,200 gallons yield​ 9,500 gallons of good product and 700 gallons of​ shrinkage)

Production​:	X	​5,300	gallons
	Y	​4,200	gallons
Sales​:	X	​5,050	at​ $300 per gallon
	Y	​3,950	at​ $80 per gallon

The cost of purchasing​ 10,200 gallons of direct materials and processing it up to the​ split-off point to yield a total of​ 9,500 gallons of good products was​ $1,050,000.

The beginning inventories totaled 35 gallons for X and 400 gallons for Y. Ending inventory amounts reflected 565 gallons of Product X and​ 1,515,000 gallons of Product Y. October costs per unit were the same as November.

Using the​ physical-volume method, what is Product​ X's approximate​ gross-margin percentage?​ (Round all intermediary calculations two decimal​ places.)

Answer 1

Using physical volume method what is product X gross margin percentage

Sales(5050×$300)	$1515000
(-) cost of goods sold($585789×5050/5300)	($558157)
Gross profit	$956843

Work note : cost of goods sold of5300 gallons of Product X.  

=. Total cost of goods sold/production gallons of Product X+ Product Y× PRODUCTION gallons of Product X

= $1050000/5300+4200×5300

= $585789

Gross profit percentage =$956843/$1515000×100 = 63.15%

Gross profit percentage = 63.15%

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