Recyclers, Inc If the Firm Allocates Joint Costs to the Main Products

question 50

Multiple Choice

Recyclers, Inc. reprocesses paper and obtains 2 main products, a by-product and a waste. By-product revenues are treated as a reduction in joint costs. During the period 1,000 tons were processed at a cost of $12,000 for materials and processing, resulting in the following: $\begin{array}{lrrrr}&&\text { Sales Value }&\text {Separable }&\text {Sales Value After }\\\text { Product } &\text { Tons } &\text { at Split-Off } &\text { Costs }& \text { Further Processing }\\\text { Main-1 } & 200 & \$ 4,000 & \$ 2,000 & \$ 10,000 \\\text { Main-2 } & 400 & 5,000 & 6,000 & 12,000 \\\text { By-product } & 300 & 2,000 & -0- & 2,000 \\\text { Waste } & 100 & -0- & -0- & -0-\end{array}$

If the firm allocates joint costs to the main products using the sales value at split-off point method, how much will be allocated to Main-2?

• A) $5,556
• B) $4,545
• C) $5,333
• D) $6,666

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