question archive Differential Chemical produced 10,500 gallons of Preon and 14,000 gallons of Paron
Differential Chemical produced 10,500 gallons of Preon and 14,000 gallons of Paron
Subject:ManagementPrice:2.87 Bought7
Differential Chemical produced 10,500 gallons of Preon and 14,000 gallons of Paron. Joint costs incurred in producing the two products totaled $8,200. At the split-off point, Preon has a market value of $8.00 per gallon and Paron $4.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used.
Multiple Choice
$1,640.
$3,280.
$4,100.
$7,505.
$4,920.
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Answer:
Joint cost allocation :
value of Preon = 10500*8 = 84000
Value of Paron = 14000*4 = 56000
Total value = 84000+56000 = 140000
Joint cost allocated to Preon = 8200*84000/140000 = 4920
so answer is e) 4920
