Robin Company Processes Copper Ore into Two Products, C and U

question 68

Multiple Choice

Robin Company processes copper ore into two products, C and U. The ore costs $5 per pound and conversion costs are $15 per pound. Robin Company plans to produce 40,000 pounds of C and 20,000 pounds of U from 60,000 pounds of ore. C sells for $30 per pound and U sells for $40 per pound. Suppose that C cannot be sold at the split- off point. Instead it must be processed further at a cost of $100,000, after which it can be sold for $45 per pound. The amount of joint cost allocated to product C would be:

• A) $384,000
• B) $816,000
• C) $720,000
• D) $800,000

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Definitions:

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including repayment schedule, interest rates, and due dates.

Discount Period

A set time frame during which a buyer can pay less than the full amount due, usually as incentive for early payment to the seller.

Cash Discount

is a reduction in the invoice price offered by sellers to buyers as an incentive to encourage prompt payment of their accounts payable.

Customer Refunds Payable

Liabilities owed to customers for products returned or services not satisfactorily rendered.