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# Contribution margin and joint cost

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24. A company sells three different types of satellite dishes in Ontario, but sells only one type in Alberta. Available data are that the budgeted sales mix percentage in Ontario is .35(type 1), and .25(type 2). The contribution margins per unit are \$200 (1), and \$120 (2), and \$140 (3). Calculate the budgeted contribution margin per composite unit budgeted mix for Ontario and Alberta respectively.
a. \$114 and \$70 b. \$156 and \$114 c. \$156 and \$200
d. They are the same in both provinces. e. \$156 and \$70

25. 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:
10,000 litres (100,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)

Production: X 5,000 litres Y 4,500 litres
Sales: X 4,750 litres at \$150 per litre Y 4,000 at \$100 per litre

The cost of purchasing 10,000 litres of direct materials and processing it up to the split off point to yield a total of 9,500 litres of good products was \$975,000.

The beginning inventories totaled 50 litres for X and 25 litres for Y. Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y. October costs per unit were the same as November.

What is the approximate amount of joint costs in Products Y's ending inventory if the physical volume method is used and the company uses the FIFO inventory method?
a. \$53,886 b. \$60,285 c. \$50,917 d. \$67,358 e. \$60,145

#### Solution Preview

24.
Ontario's contribution is : .35*200+120*.25+140*.40=156
Alberta's ...

#### Solution Summary

This explains the concepts of contribution margin and joint costs through practical examples.

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