The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:Direct Materials processed:33,000 gallonsThe costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 33,000 gallons of saleable product was $55,000.Production Butter cream 13000 gallons condensed milk 20000 gallonsSales Butter cream 12500 gallons condensed milk 19500 gallonsSales Butter cream 2.50 $ per gallon
condensed milk $ 9.00 per gallonsSeparable costin Butter cream 14500 gallons
condensed milk 36000 gallons
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. Which of the following statements is true of Brital?
A) The gross profit percent of condensed milk is lower than the gross profit of butter cream.
B) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the split-off point.
C) The gross profit of condensed milk is lower than the gross profit of butter cream.
D) The gross margin is allocated to the joint products in order to determine the joint-cost allocations.