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

question 3

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-1 using the physical measure 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) $54,250.
• B) $757,800.
• C) $1,705,320.
• D) $49,200.
• E) $1,136,880.

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Definitions:

Vega

The response of option price to a change in the standard deviation of the underlying asset.

Option's Price

The price at which a specific derivative contract can be exercised, determined by factors like the underlying asset's price, time to expiration, and volatility.

Volatility

The rate at which the price of a security increases or decreases for a given set of returns.

Time Value

The idea that having money now is more valuable than having the same amount later on because of its ability to generate earnings over time.