Spaniel Company Manufactures Three Products from a Joint Process Assuming the Relative- Sales- Value Method of Allocating Joint Costs

question 133

Multiple Choice

Spaniel Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data are also available: $$\begin{array}{l}\begin{array} { l l l } &&\text { Sales Value at }\\\text { Product } & \text { Units Produced } & \text { Split- off } \\\text { X } & 5,000 & \$ 70,000 \\\text { Y } & 3,000 & \$ 30,000 \\\text { Z } & 2,000 & \$ 100,000\end{array}\end{array}$$ Assuming the relative- sales- value method of allocating joint costs, the amount of joint costs allocated to product X would be:

• A) $87,500
• B) $125,000
• C) $70,000
• D) $250,000

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Definitions:

Point Estimate

A single value (or point) estimate to summarize a likely value for a population parameter based on sample data.

Unknown Parameter

A quantity in a statistical model that needs to be estimated from the data because its value is not known a priori.

P-Value

The probability that the observed data (or a more extreme) would occur if the null hypothesis were true, used to determine the statistical significance of the observed effect.

Type I Error

A statistical error occurring when a true null hypothesis is incorrectly rejected.