Question

Wren Pork Company uses the value basis of allocating joint costs in its production of pork products. Relevant information for the current period follows:Product Pounds Price/lb.Loin chops 3,000 $5.00 Ground 10,000 2.00 Ribs 4,000 4.75 Bacon 6,000 3.50 The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops?Multiple Choicea. $0.b. $5,909.c. $8,600.d. $10,750.e. $43,000.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Cost allocate to Loin chops:-

= Total Joint Cost × [Loin Chops sales value ÷ (Loin Chops sales value + Ground Sales value + Ribs sales value + Bacon Sales value) ]

= $43,000 × {(3,000 × 5 ) ÷ [(3,000 × 5 ) + (10,000 × 2 ) + (4,000 × 4.75 ) + (6,000 × 3.5)]}

=  $43,000 × [15,000 ÷ 75,000]

= $43,000 × 0.2

= $8,600