Baker Company Baker Company Produces Three Products: A,B,and C from the Same

question 92

Multiple Choice

Baker Company
Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

• A)$494
• B)$679
• C)$927
• D)$700

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00.
Refer to Baker Company.Using a physical measurement method,what amount of joint processing cost is allocated to Product B (round to the nearest dollar) ?

---

Definitions:

Utility

In economics, utility refers to the total satisfaction received from consuming a good or service.

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person gains from consuming one more unit of the product.

Demand Curve

A graph showing the relationship between the quantity of a good that consumers want to buy and its price.

Downward Slope

A graphical representation indicating a decrease or decline in value, often used in reference to graphs showing relationships such as demand curves.