Question

Differential Chemical produced 14,000 gallons of Preon and 28,000 gallons of Paron. Joint costs incurred in producing the two products totaled $6,900. At the split-off point, Preon has a market value of $6.00 per gallon and Paron $2.00 per gallon. Compute the portion of the joint costs to be allocated to Preon if the value basis is used. Multiple Choice $5,185. $1,380. $2,760. $4,140. $2,300.

Answer 1

Preon's portion joint cost =$4,140

Step-by-step explanation:

Peron portion joint cost = (Preon sale value /total sales value) × Joint cost

Product Production unit Sales value

Preon 14,000 6× 14,000 = 84,000

Paron 28,000 2× 28,000 = 56,000

Total sales value 140000

Preon portion joint cost = (84,000 /140,000) × 6,900=$4,140