Wren Pork Company uses the value basis of allocating joint costs in its production of pork products.Relevant information for the current period follows: The total joint cost for the current period was $43,000.How much of this cost should Wren Pork allocate to Loin chops?
A)$0.
B)$5,909.
C)$8,600.
D)$10,750.
E)$43,000.

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

Quizplus · Accepted Answer

Since Wren Pork Company uses the value basis of allocating joint costs, it will allocate costs to the product that has the highest sales value per pound.

According to the table, the Loin Chops have a sales value of $5.00 per pound and a total production of 2,150 pounds.

Therefore, the total value of Loin Chops produced is: 
$5.00 x 2,150 = $10,750

To allocate the joint costs, the proportion of the total joint cost that should be allocated to Loin Chops is: 
($10,750 ÷ $48,000) x $43,000 = $8,600

Therefore, Choice C) $8,600 is the correct answer.

Wren Pork Company Uses the Value Basis of Allocating Joint