The Cook Company operates a simple chemical process to convert a single material into threeseparate items, referred to here as X, Y, and Z. All three end products are separatedsimultaneously at a single splitoff point. Products X and Y are ready for sale immediately upon splitoff without further processing orany other additional costs. Product Z, however, is processed further before being sold. There isno available market price for Z at the splitoff point. The selling prices quoted here are expected to remain the same in the coming year. During2014, the selling prices of the items and the total amounts sold were as follows:X—68 tons sold for $1,200 per tonY—480 tons sold for $900 per tonZ—672 tons sold for $600 per tonThe total joint manufacturing costs for the year were $580,000. Cook spent an additional$200,000 to finish product Z. There were no beginning inventories of X, Y, or Z. At the end of the year, the followinginventories of completed units were on hand: X, 132 tons; Y, 120 tons; Z, 28 tons. There was nobeginning or ending work in process. Required:

1.Compute the cost of inventories of X, Y, and Z for balance sheet purposes and the cost ofgoods sold for income statement purposes as of December 31, 2014, using the following jointcost allocation methods:a. NRV method

b. Constant gross-margin percentage NRV method2.Compare the gross-margin percentages for X, Y, and Z using the two methods given inrequirement 1