Question

Differential Chemical produced 14,000 gallons of Preon and 28,000 gallons of Paron. Joint costs incurred in producing the two products totaled $6,900. At the split-off point, Preon has a market value of $6.00 per gallon and Paron $2.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used. Multiple Choice $5,185. $1,380. $2,760. $4,140. $2,300.

Answer 1

Answer:

Preon's portion  joint cost =$4,140

Explanation:

Peron portion  joint cost =  (Preon sale value /total sales value) ×  Joint cost

Product      Production unit                      Sales value

Preon           14,000             6×  14,000    = 84,000

Paron           28,000             2×  28,000 =   56,000

Total sales value                                          140000

Preon portion  joint cost =  (84,000 /140,000) ×  6,900=$4,140