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:

Product Pounds Price/lb.
Loin chops 3,000 $5.00
Ground 10,000 2.00
Ribs 4,000 4.75
Bacon 6,000 3.50

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.

Answer 1

c. $8,600

Step-by-step explanation:

The computation of the cost of Wren Pork allocate to Loin chops is shown below:-

Total Joint Cost × (Loin Chops sales value ÷ (Loin Chops sales value + Ground Sales value + Ribs sales value + Bacon Sales value)

= $43,000 × ((3,000 × $5) ÷ (3,000 × $5) + (10,000 × $2) + (4,000 × $4.75 ) + (6,000 × $3.5))

=$8,600

So, for computing the cost of Wren Pork allocate to Loin chops, we simply applied the above formula.