Question

Jiminez Company paid its annual property tax of $12,300 on its manufacturing facility in January. The company expects to make 5,000 units of product during the year. During January, 600 units of product were produced. Based on this information: (Do not round intermediate calculations.)

A. $1,476 of the property tax cost should be allocated to the January production.
B. $1,025 of the property tax cost should be allocated to the January production.
C. $3,075 of the property tax cost should be assigned to the January production.
D. $12,300 of the property tax cost should be allocated to the January production.

Answer 1

To allocate the property tax cost to the January production, we need to calculate the proportion of production that occurred in January and multiply it by the total tax paid. Option A is correct. Therefore, option A is correct

Step-by-step explanation:

To allocate the property tax cost to the January production, we need to calculate the proportion of production that occurred in January.

We divide the number of units produced in January (600) by the total expected units to be produced in the year (5,000) to get the proportion of production in January: 600/5,000 = 0.12.

To allocate the property tax cost, we multiply the total tax paid ($12,300) by the proportion of production in January: $12,300 * 0.12 = $1,476.

Therefore, option A is correct, and $1,476 of the property tax cost should be allocated to the January production. Therefore, option A is correct