Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 5

Joint Products Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 5,000 gallons of product A and 1.000 gallons of product B to the split-off point costs $5,600. The sales value at split-off is $2 per gallon for product A and $30 per gallon for product B. Product B requires an additional separable process beyond split-off at a cost of $2.50 per gallon before it can be sold.
Required What is the company's cost to produce 1,000 gallons of product B