Differential Chemical produced 10,000 gallons of Preon and 20,000 gallons of Paron. Joint costs incurred in producing the two products totaled $7,500. 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.
A) $1,500.
B) $3,000.
C) $2,500
D) $4,500.
E) $5,625.

Question

Quizplus · Accepted Answer

The Answer of Differential Chemical produced 10,000 gallons of Preon and 20,000 gallons of Paron. Joint costs incurred in producing the two products totaled $7,500. 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.
A) $1,500.
B) $3,000.
C) $2,500
D) $4,500.
E) $5,625.

Differential Chemical Produced 10,000 Gallons of Preon and 20,000 Gallons