Marin Products Produces Three Products — DBB-1, DBB-2, and DBB-3

question 71

Multiple Choice

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.
The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar) :

• A) $2,009,160.
• B) $286,500.
• C) $881,640.
• D) $667,345.
• E) $709,200.

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Definitions:

Strip Bond

A financial instrument resulting from the separation of the coupon payments and the principal of a regular bond, where each part is sold separately as a zero-coupon bond.

Market Yield

The return on investment for a security anticipated in the marketplace, reflecting its current price and income it generates.

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal balance twice a year, leading to interest on interest.

Market Rate

The prevailing interest rate available in the marketplace, often used as a benchmark for setting loan or investment interest rates.