Jagger, Inc. production begins in Department A with 1,000 kilograms of material, of which 40% goes to Department B, 50% to Department C, and the rest evaporates. From Department C, 72% goes to Department D, 24% to Department E, and the remainder is scrapped. There are no intermediate markets. By-product sales are treated as miscellaneous income. The following occurred during the month: $$\begin{array} { l r c l }
\text { Department } & { \text { Costs } } & \text { Sales } & \text { Product Type } \
\text { A } & \$ 20,000 & - - - & \
\text { B } & 5,000 & \$ 10,000 & \text { By-product } \
\text { C } & 30,000 & - - & \
\text { D } & 20,000 & 60,000 & \text { Main-1 } \
\text { E } & 10,000 & 30,000 & \text { Main-2 }
\end{array}$$ If Jagger uses the physical output method, the total cost of Main-1 is:

Question

Jagger, Inc. production begins in Department A with 1,000 kilograms of material, of which 40% goes to Department B, 50% to Department C, and the rest evaporates. From Department C, 72% goes to Department D, 24% to Department E, and the remainder is scrapped. There are no intermediate markets. By-product sales are treated as miscellaneous income. The following occurred during the month: $$\begin{array} { l r c l } 
\text { Department } &  { \text { Costs } } & \text { Sales } & \text { Product Type } \
\text { A } & \$ 20,000 & - - - & \
\text { B } & 5,000 & \$ 10,000 & \text { By-product } \
\text { C } & 30,000 & - - & \
\text { D } & 20,000 & 60,000 & \text { Main-1 } \
\text { E } & 10,000 & 30,000 & \text { Main-2 }
\end{array}$$ If Jagger uses the physical output method, the total cost of Main-1 is:

Quizplus · Accepted Answer

To use the physical output method, we need to calculate the total cost of Main-1, which is the sum of the costs incurred in Departments A, B, C, and D.

Department A: 
Since 40% of the starting material goes to Department B and 50% goes to Department C, only 10% evaporated. Therefore, the starting material for Department A is 1,000 x 0.9 = 900 kg. The cost incurred in Department A is $15,000.

Department B: 
The material transferred from Department A is 900 x 0.4 = 360 kg. The cost incurred in Department B is $6,000.

Department C: 
The material transferred from Department A is 900 x 0.5 = 450 kg. From this, 72% goes to Department D and 24% goes to Department E. Therefore, the material transferred to Department D is 450 x 0.72 = 324 kg, and the material transferred to Department E is 450 x 0.24 = 108 kg. The remaining material (450 x 0.04 = 18 kg) is scrapped. The cost incurred in Department C is $9,000.

Department D: 
The material transferred from Department C is 324 kg. The cost incurred in Department D is $12,500.

Total cost of Main-1: 
The total cost of Main-1 is the sum of the costs incurred in Departments A, B, C, and D. 
Total cost = $15,000 + $6,000 + $9,000 + $12,500 
Total cost = $42,500

Therefore, the best choice is B.

Jagger, Inc If Jagger Uses the Physical Output Method, the Total Cost