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 net realizable value method is used? a. $62,500 b. $47,500 c. $36,054 d. $11,446

Explanation / Answer

Net realizable method :

Bright realizable value = (250-60)*250 = 47500

Dull realizable value = (200-40)*1000 = 160000

Bright joing cost allocated = 50000*47500/207500 = 11446

Gross profit = Net realizable value-joint cost allocated

= 47500-11446

Gross profit = 36054

so answer is c) $36,054

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