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

question 9

Multiple Choice

Designer Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Designer 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 sells for $30 per pound and Product U sells for $40 per pound.Assume the company uses the physical-units method of allocating joint costs.What amount of joint costs is allocated to Product U?

• A) $0
• B) $100,000
• C) $300,000
• D) $400,000

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Definitions:

Partnership

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Individual

Pertaining to or characteristic of a single, particular person or thing as opposed to a group.

Mining Partner

A member of a partnership formed for the purpose of mining activities, sharing in the profits and liabilities of the venture.

Transferable

Capable of being passed on or conveyed from one person or entity to another.