Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) Product Units Weight per Unit (lbs) Final Sales Value Further Processing Costs Sales Value at Split-Off B752 15 90,000 $420 $200 $230 B797 25 110,000 480 260 310 If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation? Question options: a) $214.26 million. b) $215 million. c) $220 million. d) $214.50 million.
Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) Product Units Weight per Unit (lbs) Final Sales Value Further Processing Costs Sales Value at Split-Off B752 15 90,000 $420 $200 $230 B797 25 110,000 480 260 310 If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation? Question options: a) $214.26 million. b) $215 million. c) $220 million. d) $214.50 million.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4PB
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Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions)
| Product | Units | Weight per Unit (lbs) | Final Sales Value | Further |
Sales Value at Split-Off |
| B752 | 15 | 90,000 | $420 | $200 | $230 |
| B797 | 25 | 110,000 | 480 | 260 | 310 |
If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation?
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