A Granary Allocates the Cost of Unprocessed Wheat to the Production

question 81

Multiple Choice

A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $120,000, and the following quantities of product and sales revenues were produced. $$\begin{array} { l c c } \text { Product } & \text { Pounds } & \text { Price per Pound } \\\text { Feed } & 100,000 & \$ 0.70 \\\text { Flour } & 50,000 & 2.20 \\\text { Starch } & 20,000 & 1.00\end{array}$$ How much of the $120,000 cost should be allocated to feed if the value basis is used?

• A) $ 70,000.
• B) $ 45,000.
• C) $ 100,000.
• D) $ 42,000.
• E) $ 12,250.