The Supreme Juice Company undertakes the following activities in its production operation and incurred the following costs during the first half of 2019:
Processing the juice into 3 final products involves the use of 2 machines, each of which incurred depreciation costs of $15,000 for the first half of 2019. Each product requires a different set up on the processing machines, so Supreme Juice normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce orange juice for the next 2 weeks. Finally, workers set up the same machines to produce orange smoothies during the last week of each month.
During the first half of 2019, 30% of the oranges harvested were turned into orange juice concentrate, 45% were processed into orange juice, and 25% became orange smoothies. The relative sales values of each product were: 5% for orange juice, 20% for orange juice concentrate, and 10% for smoothies. The orange juice concentrate operation takes up 40% of Supreme Juice's total factory space. Regular orange juice and orange smoothies occupy 35% and 25%, respectively.
If juice extraction costs are allocated to product lines based on usage of factory space, the amount allocated to smoothies will be:
A) $3,750
B) $4,200
C) $3,000
D) $2,250
Correct Answer:
Verified
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