Reference: 22_01
Joint products A and B are produced in a single operation from Material M. Three hundred gallons of Material M, costing $450, produced 200 gallons of Product A, selling for $2 per gallon, and 100 gallons of Product B, selling for $6 per gallon.
-The portion of the $450 cost that should be allocated to Product A using the value basis of allocation is:
A) $0
B) $180
C) $225
D) $300
E) $425

Question

Quizplus · Accepted Answer

Total sales ($1,000): Product A $2(200) = $400 + Product B $6(100) = $600
Allocation of cost ($450): Product A $400/$1,000 = .40($450) = $180

Reference: 22_01 Joint Products a and B Are Produced in a Single