Garfield Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Garfield Company plans to produce 40,000 pounds of C and 20,000 pounds of U from 60,000 pounds of ore.C sells for $30 per pound and U sells for $40 per pound.Assuming the physical-units method of allocating joint costs, the amount of joint costs to product C would be _____.
A)$800,000
B)$600,000
C)$200,000
D)$0

Question

Quizplus · Accepted Answer

The physical-units method of allocating joint costs allocates costs based on the physical units of each product produced. In this case, 40,000 pounds of C and 20,000 pounds of U are produced, so the joint costs would be allocated as follows:Joint costs = $5 per pound x 60,000 pounds + $15 per pound x 60,000 pounds = $1,200,000Joint costs allocated to C = $1,200,000 x 40,000 pounds / 60,000 pounds = $800,000

Garfield Company Processes Copper Ore into Two Products, C and U.The