Wren Pork Company Uses the Value Basis of Allocating Joint

question 85

Multiple Choice

Wren Pork Company uses the value basis of allocating joint costs in its production of pork products. Relevant information for the current period follows: $$\begin{array} { l r r } \text { Product } & \text{ Pounds } & \text { Price/lb } \\\text { Loin chops } & { 3 , 0 0 0 } & \$ 5.00 \\\text { Ground } & 10,000 & 2.00 \\\text { Ribs } & 4,000 & 4.75 \\\text { Bacon } & 6,000 & 3.50\end{array}$$ The total joint cost for the current period was $43,000. How much of this cost should Wren Pork allocate to Loin chops?

• A) $0.
• B) $5,909.
• C) $8,600.
• D) $10,750.
• E) $43,000.

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Definitions:

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding the cost of goods sold, including expenses like rent, utilities, and payroll.

Mark-up

The upcharge on the cost of merchandise to accommodate overhead expenses and profitability.

Retail Price

The total cost at which a product is sold to the end consumer, inclusive of all taxes, shipping, and handling fees.

Operating Expenses

Costs associated with running a day-to-day business operation, such as salaries, rent, and utilities.