Each Pound of the Raw Material, Ore, Yields 5 Units

question 22

Multiple Choice

Each pound of the raw material, ore, yields 5 units of Beta and 15 units of Gamma.Ore costs $20 per pound.A pound of ore has processing costs (not including the cost of the raw material) of $30 at the split-off point.The selling price for a unit of Beta is $80.The selling price for a unit of Gamma is $40.If the relative sales value method is used to allocate the joint costs, what is the total cost allocated to each unit of Beta?

• A)$12.00
• B)$20.00
• C)$33.33
• D)$12.50

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Definitions:

Activity Rate

A measure used in activity-based costing to assign costs to activities based on their use of resources.

Batch Setup

The process of preparing equipment and machinery for a specific batch of production, including configuration and adjustments.

Activity Cost Pools

A method in cost accounting where costs are accumulated according to activities performed, facilitating more accurate product or service costing.

Activity-based Costing System

A method of allocating costs to products or services based on the activities that go into producing them.