Coyote Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Coyote 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 relative-sales-value method of allocating joint costs, the amount of joint cost allocated to product U would be _____.
A)$0
B)$400,000
C)$480,000
D)$685,714

Question

Quizplus · Accepted Answer

The relative sales value of C is (30/(30+40)) = 0.43 and the relative sales value of U is (40/(30+40)) = 0.57. 
Joint costs total = (60,000 x 15) = $900,000.
Joint cost allocated to U = (0.57 x 900,000) = $513,000.
Joint cost allocated to C = (0.43 x 900,000) = $387,000.
Therefore, the amount of joint cost allocated to product U would be $480,000.

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