Ranger Company Produces Three Products from a Joint Process

question 49

Multiple Choice

Ranger Company produces three products from a joint process. Products Hee and Haw are considered main products. Product Cims is a by- product. Joint processing costs should be allocated to:

• A) Cims and Haw
• B) Hee and Cims
• C) Hee and Haw
• D) Hee, Haw, and Cims

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Definitions:

Economic Profit

The total revenue minus explicit and implicit costs; it represents additional income over what could be earned in the next best alternative.

Average Total Cost

This refers to the total cost of production divided by the number of units produced, representing the cost per unit.

Marginal Cost Curve

A graph that shows the relationship between the marginal cost of producing an additional unit of a good or service and the quantity produced.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable on another.