The Mallak Company Produced Three Joint Products at a Joint

question 55

Multiple Choice

The Mallak Company produced three joint products at a joint cost of $100,000. Two of these products were processed further. Production and sales were:
$\begin{array}{cccc}&&&\text { Additional Processing }\\\text { Product } & \text { Weight } & \text { Sales } & \text { Costs } \\ \text { P } & 300,000 \mathrm{lbs}& \$ 245,000 & \$ 200,000 \\ \text { Q } & 100,000 \mathrm{lbs} & 30,000 & -0- \\ \text { R } & 100,000 \mathrm{lbs} &175,000 &100,000 \\\end{array}$
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Assume Q is a by-product and Mallak uses the cost reduction method of accounting for by-product cost. If estimated net realizable value is used, how much of the joint costs would be allocated to product R?

• A) $38,889.
• B) $43,750.
• C) $50,000.
• D) $62,500.

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Definitions:

Nominal Risk-Free Rate

The rate of return on an investment with no risk of financial loss, not taking into account inflation.

Purchasing Power Parity

An economic theory that suggests exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Athletic Shoes

Footwear designed specifically for sports or other forms of physical exercise.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, typically associated with government bonds.