Cardinal Company Processes Copper Ore into Two Products,C and U

question 37

Multiple Choice

Cardinal Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Cardinal Company plans to produce 40,000 pounds of Product C and 20,000 pounds of Product U from 60,000 pounds of ore.Product C cannot be sold at the split-off point and must be processed further at a cost of $100,000,after which it can be sold for $45 per pound.Product U sells for $40 per pound.What amount of joint costs is allocated to Product C?

• A)$384,000
• B)$720,000
• C)$800,000
• D)$816,000

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Definitions:

Liquidity

The ease with which an asset or an investment can be converted into cash without significantly affecting its price.

Net Income

The remaining earnings of a company post all tax and expense deductions from its total sales.

Common-Sized Income Statement

An income statement in which each line item is expressed as a percentage of sales, facilitating comparison across periods or companies.

Total Assets

The sum of all assets owned by a company, including current, non-current, tangible, and intangible assets.