A Dairy Allocates the Cost of Unprocessed Milk to the Production

question 136

Multiple Choice

A dairy allocates the cost of unprocessed milk to the production of milk, cream, butter and cheese.For the current period, unprocessed milk was purchased for $240,000, and the following quantities of product and sales revenues were produced. $\begin{array}{lrr}&&\text { Price per }\\\underline { \text { Product } } &\underline { \text { Pounds } } &\underline { \text { Pounds }} \\\text { Milk } & 100,000 & \$ 0.90 \\\text { Cheese } & 50,000 & 2.20 \\\text { Butter } & 20,000 & 1.00 \\\text { Cream } & 10,000 & 3.00\end{array}$ How much of the $240,000 cost should be allocated to milk?

• A)$0
• B)$86,400
• C)$90,000
• D)$133,333
• E)$240,000

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