Bevo Beef Company uses the relative market value method of allocating joint costs in their production of beef products.Relevant information for the current period follows:
$\begin{array}{lcc}
& \text { Production in } & \text { Market } \
\text { Product } & \text { Pounds } & \text { Price/Pound }\
\text { Sirloin } & 3,000 & \$ 5.00 \
\text { Hamburger } & 10,000 & 2.00 \
\text { Rib eye } & 4,000 & 4.75 \
\text { Roast } & 6,000 & 3.50
\end{array}$

The total joint cost for the current period was $43,000.How much of this cost should Bevo Beef allocate to sirloin?
A) $0
B) $5,909
C) $8,600
D) $10,750
E) $43,000

Question

Bevo Beef Company uses the relative market value method of allocating joint costs in their production of beef products.Relevant information for the current period follows:
$\begin{array}{lcc}
& \text { Production in } & \text { Market } \
\text { Product } & \text { Pounds } & \text { Price/Pound }\
\text { Sirloin } & 3,000 & \$ 5.00 \
\text { Hamburger } & 10,000 & 2.00 \
\text { Rib eye } & 4,000 & 4.75 \
\text { Roast } & 6,000 & 3.50
\end{array}$

The total joint cost for the current period was $43,000.How much of this cost should Bevo Beef allocate to sirloin?
A) $0
B) $5,909
C) $8,600
D) $10,750
E) $43,000

Quizplus · Accepted Answer

The relative market value method allocates joint costs based on the proportion of each product's market value to the total market value. Sirloin's market value is 3,000 pounds * $5.00 = $15,000. The total market value is (3,000 * $5.00) + (10,000 * $2.00) + (4,000 * $4.75) + (6,000 * $3.50) = $75,000. The proportion for sirloin is $15,000 / $75,000 = 0.2. Therefore, the allocated cost is 0.2 * $43,000 = $8,600.

Bevo Beef Company Uses the Relative Market Value Method of Allocating