Garden of Eden Company manufactures two products, Brights and Dulls, from a join

Question

Garden of Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls. The market price is $250 for Brights and $200 for Dulls.

What is the gross profit for Brights assuming the physical units method is used?

$37,500

$62,500

$47,500

$12,500

a.

$37,500

b.

$62,500

c.

$47,500

d.

$12,500

Explanation / Answer

Joint cost allocated to bright = 50000*250/1250 = 10000

Calculate gross profit :

so answer is a) $37,500

Sales (250*250) 62500 Less: Joint cost (10000) Less: Seprable cost (250*60) (15000) Gross profit 37500

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