Use the Following Information to Answer the Following Questions

question 45

Multiple Choice

Use the following information to answer the following Questions
Cheyenne Enterprises manufactures Nuts and Bolts from a joint process (cost = $80,000) . Five thousand pounds of Nuts can be sold at split-off for $20 per pound; ten thousand pounds of Bolts can be sold at split-off for $15 per pound. For product costing purposes Cheyenne allocates joint costs using the relative sales value method.
-The amount of joint cost allocated to Nuts would be:

• A) $32,000.
• B) $40,000.
• C) $48,000.
• D) $60,000.
• E) $80,000.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs, both direct and indirect, in the cost of a product.

Markup

The amount added to the cost of merchandise to arrive at the selling price, usually expressed as a percentage of the cost.

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Absorption Costing

An accounting method that includes all production costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.